What Is a Certified Divorce Financial Analyst (CDFA)?
A certified divorce financial analyst (CDFA) is a financial professional who can help you achieve a fair outcome in the event of a divorce. They are skilled at analyzing a divorcing couple’s finances and talking with them and any legal professionals they’ve hired about what an equitable divorce would look like.
What does a certified divorce financial analyst (CDFA) do?
A CDFA analyzes the finances of a divorcing couple to help them achieve an equitable (financially fair) divorce settlement. Common aspects of a divorcing couple’s finances that a certified divorce financial analyst will consider include the following:
In most cases, much of a married couple’s property is considered marital property, meaning it is owned by both parties. However, some property can be considered separate property in a marriage, meaning that even though an individual is married, this property is still considered to be solely their own. This is an important distinction in a divorce. A CDFA can help divorcing couples clarify what is marital property and what needs to be divided.
Joint and separate debts
A married couple may have joint debts, and each spouse may also have separate debts. This can be confusing during a divorce, when all debts must be divided between the two people. A CDFA can help you understand your shared debts and what would constitute a fair division.
Division of assets
One of a CDFA’s broadest and most important duties is helping to establish what a fair division of assets will look like for a divorcing couple.
Specific property division laws vary by state. In community property states, the goal is an equal (meaning 50/50) split of assets. But in most states, the goal is an equitable equitable split of assets, meaning it is financially fair (and not always 50/50).
Using their knowledge of property and tax laws and the best practices of financial planning, A CDFA helps to establish the value of a couple’s assets (and their debts) and how these things ought to be divided.
For many couples, some of their most valuable and contentious assets will be any houses they have — especially if the divorcing couple only owns one house. A CDFA can help to definitively establish the value of a house. Working with the couple and their legal teams, they can present some reasonably fair options regarding what might be done with the house. Often, a house is either sold and the money is split, or one party gets the house but must “buy out” the other party’s share of the property value.
Certified divorce financial analysts can help you figure out whether alimony should be paid and, if so, what a fair amount would be. And, if you’re the person asking for spousal support, they can help you explain the logic behind your requested amount.
As is true of most of their work, the specifics of what is considered appropriate spousal support will depend on your state's divorce laws. States generally have distinct (but often similar) factors that are to be considered when determining when, and how much, spousal support is appropriate.
CDFAs will also help you think through the issue of child support and what kind of lifestyle you can afford after the divorce. Furthermore, a CDFA in your state is familiar with what the state considers to be an appropriate child support payment schedule. They can help you project possible ways in which your financial situation will evolve over time in relation to child support payments made or received, too.
Retirement accounts and healthcare coverage
If couples have certain types of retirement accounts or healthcare coverage, divorcing can sometimes make it unclear what will happen to these things. CDFAs can explain a divorcing couple’s options and in what ways the divorce may or may not affect access to these accounts and coverage packages. In regard to healthcare and similar types of coverage, they may also be able to suggest some solutions if a party’s coverage is likely to change.
The term investment covers a gamut of potential ways in which a married couple may have used their money. For example, buying shares in a company is traditionally viewed as investing, but one can also invest in things such as education.
A certified divorce financial analyst can help determine if investments can be divided and how they should be divided, if appropriate. They can also help weigh investments that cannot or realistically shouldn’t be divided, so the party not benefitting from that investment still gets a fair outcome from the divorce process.
Liquidating and dividing assets
As mentioned when discussing how properties like houses are sometimes addressed, it’s common in a divorce for many assets to be liquidated, meaning sold for cash. Other assets are simply valued and split between the parties, especially assets to which one or both parties have an emotional attachment. CDFAs work with both parties to see what they’d prefer to liquidate and what they wish to divide without selling.
Liquidating assets is often the easiest way to fairly split them, as money is very easy to split between two parties. Dividing assets allows at least one party to keep something they had owned during the marriage.
Tax implications of divorce
A divorce can have significant tax implications for the parties involved, especially if they have a complex mix of assets and debts that need to be split. As a financial professional, a CDFA can thoroughly review how the finances of the divorcing parties are likely to change and what the tax implications of those changes are likely to be. They may also be able to give advice on how to lessen the burden of these changes.
How do I find a CDFA to help with my divorce?
Certified divorce financial analysts are often found online, although you should keep in mind that financial law can differ depending on where you live, and you will need a financial professional who is an expert in the rules and regulations surrounding divorce in your area. Read reviews about the quality of their services before committing to a particular CDFA.
We offer CDFA services at Hello Divorce and encourage you to see how we might be able to help. You can schedule a free 15-minute call with us to learn about what we offer.
ReferencesCertified Divorce Financial Analyst (CDFA): Meaning, How it Works. (November 2021). Investopedia.
Financial Awareness Is a Must When Preparing for Divorce. (July 2023). Forbes.