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Your Financial Professional

By Diana Shepherd on March 27, 2012

How to choose and work with a financial professional to achieve the best possible outcome to your divorce

During and after divorce, many people report that their standard of living decreases – sometimes significantly. Unless you change your occupation for one with a higher paycheck, you’ll have the same amount of income but more and higher expenses: where there once was one, there are probably now two homes, two cars, two sets of furniture, two sets of children’s clothes and toys, etc. During your divorce, you need sound financial advice to ensure the settlement is fair to both parties; afterwards, you’ll probably need help adjusting to your new circumstances and planning for a secure future. Here’s an introduction to some of the financial professionals you may need – along with some suggestions of how to find and work with them.

Accountant (CPA, CA, CGA)

An accountant – a Certified Public Accountant (CPA) in the USA and a Chartered Accountant (CA) or Certified General Accountant (CGA) in Canada – can handle many of the financial aspects of your divorce. His or her responsibility is to calculate your net worth and your spouse’s net worth, and to produce figures that are agreeable to both you and the courts. There are a number of accreditations given to accountants, and you’ll find these designations after their name. Wading through the differences between someone who is a Certified Fraud Examiner (CFE), or a Board Certified Forensic Examiner (BCFE), or a member of the American Society of Appraisers (ASA), or who has a National Association of Certified Valuation Accreditation (NACVA), may seem a daunting task.

In most cases, you’ll be looking for an accountant with practical experience in divorce matters. Look for someone with good analytical skills and some background in forensic accounting so they will be able to ferret out the details behind what’s on the face of the statement.

Ask your lawyer, CDFA®, or personal accountant to recommend an accountant who has experience with matrimonial law. “Trust your instincts at all times when deciding ... whether to use Accountant ‘A’ or Accountant ‘B’," says Esther M. Berger, a Certified Financial Planner® and the author of MoneySmart Divorce (Simon & Schuster). Look for someone honest and forthright, and who offers reasonable economic terms.

Certified Financial Planner® (CFP®)

A CFP’s job is to give you an understanding of your financial needs. Divorce inevitably creates changes in your financial situation, and you may need some help in adjusting to your new lifestyle. A CFP can help you with budgeting and investing, and some can also assist with tax, estate, or retirement planning. He or she will help you organize your financial future by proposing a personalized plan with a time horizon, and a solid investment strategy to help you towards financial stability for tomorrow. Ask professionals for referrals, or ask your friends who have similar financial situations to recommend a CFP.

Certified Divorce Financial Analyst® (CDFA®)

A CDFA is a financial professional – often also a financial planner or an accountant – who has specialized skills and experience that enables him or her to analyze the long-term financial impact of divorce. Financial professionals who have met specific education and experience requirements have been designated CDFAs by the Institute for Divorce Financial Analysts™ (IDFA™).

CDFAs receive special training in divorce-related financial issues such as tax and property division. After completing the IDFA training and passing the exams, CDFAs also receive a free trial to special software enabling them to produce charts and graphs that will show a client the results of choosing one scenario over another. A CDFA can take the offer on the table and project out 5, 10, 20 years to show you what you’ll have to live on if you sign the agreement. If the projections show that you’re going to run out of money after 18 months, you’ll need to renegotiate your agreement. That’s why it’s so important to meet with a CDFA before you sign your agreement. If this advice comes too late for you, meeting with a CDFA could still be worthwhile: he or she can look at your financial situation and show you how to improve it by making some spending/saving changes.

Questions to Ask a Prospective Financial Professional

Once you’ve set up an initial interview, there are a number of questions you should ask to make certain you’re dealing with a competent professional – and someone who’s right for you.

  • How many times have you been to court? Your accountant may be testifying on your behalf about all your financial secrets, and you want someone who has a fair amount of experience in the courtroom. If possible, find out how these cases turned out.
  • Have you worked with many lawyers? Ask for a few references and call them; you don’t want to find out your accountant has been moving around from firm to firm because of bad practices rather than exceptional skill.
  • What do you think the outcome will be? Ask the accountant to predict the process and estimate your chances of getting what you want. What does he or she think is going to happen?
  • How much are your services going to cost? This is an important question in any situation. Ask about the terms of payment, when and how services will be billed. Remember that once a fee is agreed upon and a contract is signed, any additional fees should be by prior written agreement only. You may want to add this to any contract you sign, if it’s not already there.

Working With Your Financial Professional

When you sit down at the initial interview, you may choose not to bring any important paperwork with you. It’s important to establish a good rapport. It’s a meeting of personalities, and you’re looking for respect, understanding, and an ability to talk freely.

However, once you start into the financial legalities of the case, there are several important documents your CDFA professional or accountant will need to see:

  • Personal tax returns for you and your spouse for the last five years
  • Books, records, financial statements, and tax returns for any businesses in which you or your spouse has an interest
  • Banking and credit-card statements
  • Mortgage statements
  • Telephone bills
  • Other records of major expenditures
  • Stocks, bonds, mutual funds, and equities
  • Retirement plans
  • All insurance policies
  • Descriptions of your and your spouse’s employee benefits
  • Your latest pay stubs

You’ll also need valuations or other paperwork detailing property you and your spouse own together or separately – from the contents of a safety deposit box to the car to your home. Although you’ll be dealing mainly with "big ticket items" here, if something is very important to you, make sure it’s on your list. If a business is involved, brokerage statements or corporate minute books will also be required. Basically, your accountant or planner needs to see any major paperwork that involves the transaction of money – for both you and your spouse.