Q & A with a CDFA: The Basics to Divorce
Choosing to divorce is difficult and leaves one feeling uncertain about the future. As February (while the month of love) is statistically the month when most couple’s get divorced, we thought it prudent to interview our in-office, divorce guru, Marianna Goldenberg, CDFA. We asked Marianna the most common questions about divorce, and she offered her wisdom:
Where should I start?
With any process, you should start with the basics. Divorce is emotional for everyone involved and you cannot make sound decisions under duress. After the emotions subside, it all comes down to children and financial security. Preparation is key!
You need to understand where you are financially before beginning the process of dividing up what you’ve built together. This includes what assets you have, where they are held, and who owns them. Organize yourself before you start. You will be grateful you did!
Can you name a few of the common mistakes that I can avoid while we decide on the division of our assets?
One of the most common mistakes that I see is becoming emotionally attached to physical assets—like the home that you raised your family in. Typically, women will crave the stability of keeping the home that they know and love, but this can greatly impact their financial future (especially if they cannot afford the maintenance and payments).
Another common mistake would be not understanding the more complex assets that you have acquired as a couple, that may not be divisible or transferable. Oftentimes, this becomes clear after the divorce decree has been signed, when there is little that can be done to rectify the issue. A prime example of this would be executive benefits such as Stock Options or Restricted Stock Unites (RSUs), awarded to the employee where the ownership cannot be transferred to the non-employee spouse. These assets need to be addressed in great detail in the Marital Settlement Agreement.
Ensuring that the agreement is specific is essential, because without clearly noting which assets are to be received and by whom, you’ll end up spending more time and money to clarify after the fact.
Is my divorce lawyer also a CDFA? What is a CDFA?
Short answer: probably not. While some attorneys will acquire the CDFA designation, your CDFA is typically a financial professional who works in conjunction with divorcing couples and their attorneys to achieve equitable divorce settlements. CDFA’s are knowledgeable about tax laws, asset distribution, and short/long-term financial planning. Consulting with a CDFA throughout your divorce process can help you to reach an equitable settlement, in a timely fashion. CDFA’s also strive to ensure that the settlement agreement is clear and concise in reference to the division of assets, which helps both parties and their attorneys to expedite the process.
How can I be sure that I get my equal share?
There is a HUGE difference between equal and equitable. What looks equal on paper, isn’t always equitable because of the liquidity of assets, different valuation methods, risk characteristics, and tax consequences. A great example of this is one party keeping the house that may not necessarily grow in value and is illiquid vs. an investment portfolio which will grow over time and where tax liabilities can be controlled.
To make sure that you receive an equitable share of the assets that you’ve gathered as a couple, you’ll want to consult a CDFA to plan for the future and to understand your current position.
When can I expect the divorce to be finalized?
Every divorce is different. The process timeline varies and depends on many circumstances such as: asset value, liquidity, complexity of the marital assets, if there is custody of minor children involved, how adversarial the couple is, etc.
In an ideal world, both parties amicably agree to child custody and asset division, but this is rare and after years of marriage, both parties generally require their own attorneys to negotiate on their behalf. As a result, some divorces take months, while others can take years. Having a strong team of advocates on your side to help you makes all the difference, no matter the timeframe.