The emotional aspects of divorce are often compounded when dealing with the financial issues relating to marital breakdown. A Chartered Financial Divorce Specialist (CFDS) provides a unique set of skills providing a detailed and focused approach to addressing these needs. Separation and divorce rank up there with the most stressful events you can possibly experience. At a time when emotions are running high, and resources are stretched, it makes sense to hire a professional who can assist with the financial aspects, leaving your lawyer to concentrate on the legal issues involved. Even someone with a good knowledge of finances can become easily overwhelmed by this task. Important information will inevitably be missed and errors made.
Why hire a Financial Divorce Specialist? A CFDS, in addition to being a financial planner or accountant, has in-depth training in the financial fundamentals of divorce. This includes separation & divorce concepts, net worth and cash flow analysis, budgeting, taxation specific to divorce, family law process & collaborative practice, pensions, asset and liability division, child and spousal support, and risk management.
An accredited financial specialist leads the client in a discovery process to determine how best to assist in reducing the pain involved with the financial disclosure requirements and by providing an in-depth evaluation of a client’s financial situation. In addition to determining what disclosure is to be collected and documented for each individual client circumstance, the financial specialist will complete the Net Family Property Statement and/or Financial Statement and share as needed with the legal team. A CFDS may map multiple variations of these in the settlement process to look at alternate scenarios that may work for the couple. Training in domestic violence and power imbalances is also an important component, since the separation period is one of the most dangerous for those experiencing abuse.
The forecasting of settlement options by means of a financial plan can be instrumental in helping with decision making. Can I afford to keep the house? Will taking cash or part of my spouse’s pension be better for me in retirement? A plan will provide peace of mind or a reality check by looking at multiple alternate scenarios showing resulting tax, cash flow and net worth positions and implications. What does the future look like for me? A CFDS will also assist with budgeting and cash flow planning, and an insurance analysis if required to ensure sufficient policies are in place to cover any child or spousal support obligations.
I strongly advocate for alternative dispute resolution (ADR) in divorce. In Mediation and Collaborative Practice, clients negotiate a mutually acceptable settlement without going to court. The professionals on the team help create customized solutions that consider the priorities of both spouses. With an emphasis on full disclosure, respect, and open communication, this approach is client-directed and family-focused. It preserves relationships and results in better separation agreements, as clients are in control of the process and ensure their goals, needs and interests are addressed. A CFDS acts as a neutral party in the Collaborative Process, being retained jointly by the couple. This saves time and money as only one financial statement is completed, the gathering of financial documents is simplified, and the couple is able to split the fees. Financial professionals provide unbiased information and assistance and help clients reach a fiscally responsible settlement, while providing education and guidance throughout the process.
A CFDS assists the team by calculating Equalization Payments (who owes who and how much), Child and Spousal Support, and acts as a subject matter expert with all things financial. A review of tax returns is important, particularly for business owners, to determine what their true income is for the calculation of support numbers. The financial neutral also may make arrangements to have a pension valued, source an actuary for tax rate estimates, arrange for real estate and business valuations, and refer clients to new advisors post-separation for their benefits, investment, insurance, and estate planning needs.
Using a financial specialist can help save money in the long run by ensuring accurate completion of financial statements, in a format that is agreeable to lawyers, and allows for a quick verification of the disclosure. Clients can enter the next stage of their lives with the knowledge and confidence that they have a thorough understanding of their financial position.
Divorce involves legal, emotional, and financial issues. Hire the right professional for the right job to ensure all your needs are met.
Terri McDougall, PFP, CFDS
Chartered Financial Divorce Specialist
Collaborative Divorce Solutions