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Which Financial Professional is the Right One to Use in Divorce

Which Financial Professional is the Right One to Use in Divorce?

 

By Lee Slater, MBA, CDP

 

Divorce Financial Planners (DFPs)

Versus

Certified Public Accountants (CPAs)

Traditionally, financial planners work with individuals at the conclusion of the legal process. However, financial planners with additional training in the financial, tax and emotional issues of divorce (Divorce Financial Planners) can be extremely valuable during the divorce process.

Financial planning provides a structured approach to the analysis of an individual or family’s total financial picture. Divorce Financial Planners integrate the proven methodology of financial planning directly into the divorce process. As the recognized experts in personal finance, financial planners bring the following capabilities to the divorce process:

  • a comprehensive knowledge of individual finance

  • a client-centered approach

  • a forward-thinking perspective

 

Comprehensive Knowledge of Individual Finance

The financial planning process begins with gathering of data and coordination of financial information with other professionals such as stockbrokers and business accountants to produce a complete analysis of the current financial position. The resulting report includes budgeting and expense management, income tax, insurance, employee benefits, assets and liabilities, investments, retirement planning, educational planning and estate planning.

One of the main differences between accountants and financial planners is that accountants work in a much more limited sphere. CPAs are recognized for their expertise in auditing and income taxes. In divorce, CPAs excel in valuing businesses, professional licenses and degrees as well as forensic business accounting. In contrast to accountants, financial planners have broad expertise in personal finance and are a resource for the myriad of financial questions and strategies that arise in divorce.

To illustrate the varied work that Divorce Financial Planners perform in the divorce process, the following are examples of the diverse services offered:

Initial Review

  • Document marital standard of living through historical spending patterns

  • Compile, organize and value assets and liabilities

  • Review tax returns and financial statements

  • Examine psychological attitudes toward money

  • Review and prioritize goals

  • Estimate immediate needs

  • Track money flows through brokerage statements

  • Review employee benefits plans

Negotiation

  • Help clients understand, evaluate and negotiate settlement proposals

  • Tax impact settlement proposals

  • Minimize taxes through the efficient allocation of personal and real estate tax deductions

  • Develop realistic post divorce budgets

  • Set up 10/15 year post-divorce cash flow projections

  • Calculate appropriate amounts of life insurance to guarantee support payments

  • Calculate value of marital versus separate property of IRA, 401K & pension accounts

  • Review retirement and educational funding plans

Trial

  • Testify before the courts in many states on issues of personal lifestyle, cash flow needs and workability of settlements.

  • Design a PowerPoint presentation explaining complex financial issues for use by client’s attorney before the court

Post-Settlement/Trial



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