A divorce financial professional, or Certified Divorce Financial Analyst, can provide guidance in determining the short and long term financial impact of a proposed divorce settlement as well as provide valuable insight into the pro’s and con’s of different settlement proposals.
Below are just a few of the tax and financial considerations when going through a divorce and ways a divorce financial professional can help.
Both parties in a divorce are liable for tax liabilities due as a result of audits on joint returns. A divorce financial professional can help minimize the total taxes you and your ex will pay during separation and after the divorce. In addition, a divorce financial professional can quantitatively measure the impact taxes will have on the sale of assets. Not all assets have the same tax consequences when sold or disposed. A proposal offering a 50/50 split of all household assets where one spouse is picking and choosing from the total, may not be equitable and fair on an “after tax” basis.
- Budgeting and Cash Flow
It is critical that an accurate and complete budget is generated in order to plan for having enough cash inflows to cover expenses both during and after the divorce. When developing a cash flow analysis, it is essential to take into account the long term impact of inflation. The long term effects of inflation on a child’s education 15 years into the future can be dramatic. A divorce financial professional will work with you to develop a fair and appropriate budget and cash flow analysis.
- Estate Documents
After a divorce is finalized all estate documents must be brought up to date. Many people forget to change the beneficiaries on their life insurance policies, annuities, IRA’s or Wills. The result could be an ex-spouse ends up inheriting their estate rather than their children, new partner or another family member. A divorce financial professional will provide guidance to ensure all estates documents are current.
- Insured Financial Settlement Terms
It is important to make sure the financial settlement terms of a divorce are insured. Premature death or disability of your ex-spouse could result in lost alimony payments, child support or college education for your children. Life and disability insurance can provide a solution to avoid this situation. A divorce financial professional can provide valuable assistance with insuring the financial settlement terms of a divorce.