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Financial Planners Are Critical in High-Asset Divorces
Most people who file for divorce don’t have a high net worth. Surprisingly, that’s a good thing. When a large amount of capital or valuable assets is involved, going through a divorce becomes much more difficult. Put simply, money can complicate things. That’s why it’s important to understand the role of a certified divorce financial planner in high-asset divorces.
These knowledgeable professionals can address the financial complexities of divorce law and ensure equitable asset distribution while considering long-term economic stability. Without a certified divorce financial planner (CDFA), it’s extremely difficult to get a full accounting of all assets and properties. This can lead to unexpected and unfair outcomes.
If you’re going through a divorce, understanding the role of a CDFA will make it clear why you should work with an attorney who partners with these professionals.
Financial Analysis and Asset Valuation
Perhaps the most important role of a certified divorce financial planner in high-asset divorces is financial analysis and asset valuation. These professionals can assist in inventorying and valuing marital property — which includes most assets acquired during a marriage, regardless of whose name is on the title.
A CDFA can also help trace assets in order to distinguish between separate and marital property, which will directly affect what properties are divided during the divorce. Finally, the financial analysis role of a certified divorce financial planner also includes uncovering hidden assets. These can be of tremendous value in high-asset divorce cases.
Assistance With Issues of Equitable Distribution
Many states follow equitable distribution rules during divorces. Rather than splitting everything down the middle, the courts divide property in a way they deem fair. However, this will not always be equal — and the process can be highly subjective.
With the guidance of a high-asset divorce attorney, a CDFA can demonstrate each spouse’s financial and non-financial contributions to marital property to support equitable division. These financial planners become even more important when business assets are involved.
The CDFA can collaborate with valuation experts to determine a fair division of business assets that aligns with the equitable distribution rules in a given state. While these rules are more complex than those in community property states, a CDFA can simplify matters.
Identifying the Tax Implications of Asset Division
Many people fail to realize that the role of a certified divorce financial planner in high-asset divorces extends far beyond asset division. This becomes most apparent when the tax implications of divorce come into play. Unfortunately, many people don’t realize they should’ve worked with a CDFA until it’s too late.
For instance, did you know that selling real estate may incur capital gains taxes? A financial expert can factor these taxes into the settlement. Identifying the tax implications of alimony is also critical due to new taxation rules for both payors and recipients. A CDFA can also prepare Qualified Domestic Relations Orders to avoid tax penalties when dividing retirement accounts.
Cash Flow and Budget Planning
It’s easy to think the role of a certified divorce financial planner in a high-asset divorce would end after the case is finalized. However, these professionals can also assist with post-divorce budgeting. Sadly, most people don’t fully realize how different their lives will be after marriage. That’s often because their divorce lawyer fails to help them understand this fact.
Attorneys who work with certified divorce financial planners recognize that giving clients the best possible outcome means setting them up for success. A CDFA can create realistic budgets based on costs of living and post-divorce financial situations. They can also provide detailed financial projections showing how different settlement options affect long-term finances.
Managing Complex Assets
The importance of a CDFA in a high-asset divorce becomes extremely apparent when working with complex assets. For instance, a family home or investment property may seem like a straightforward asset. However, a financial expert can analyze whether retaining or selling the property aligns with the financial goals of one or both parties.
Most jurisdictions also require a fair business valuation when a company is involved. A CDFA can help determine how to divide business interests with minimal disruption to operations. They can even navigate the division of stock portfolios, options, and other investment accounts. This is particularly critical in equitable distribution states.
Expert Testimony
It’s impossible to overstate the importance of the role a certified divorce financial planner plays in high-asset divorces. In many instances, the services they provide can help the parties involved settle their case outside of court. Unfortunately, this will not always be possible.
Divorce litigation may become necessary if former partners cannot agree on everything. When a contested divorce occurs, the CDFA can provide expert testimony on financial matters. This will help the court understand the long-term implications of alimony and property division.
Do You Really Need an Attorney if You Hire a CDFA?
It’s difficult to overstate the importance of a certified divorce financial planner during a high-asset divorce. Even as their goal is to ensure a fair and smooth divorce, their work will have a major effect long after the courts finalize the divorce decree. For some, the CDFA is so important that they’ll question whether they need an attorney at all.
This is an understandable question, particularly if former partners want to keep things simple. However, the role of a high-asset divorce lawyer is just as important — if not more so — as the role of a certified divorce financial planner in a high-asset divorce. A CDFA can simplify finances, but your attorney is the one who navigates the complexities of the law.
Working with a family law attorney is critical if you want the best possible outcome during a divorce. At RCG Law Group, our lawyers are trained and experienced in high-asset divorces. Contact us at 385-503-3663 to schedule your confidential consultation today.
