How Divorce Mediators can Benefit from Working with a Certified Divorce Financial Analyst (CDFA)
Recently, I have been involved, as a CDFA, in several mediated divorce cases where asset division mistakes were avoided, taxes were saved, and all the financial details were covered.
Today I want to share two of those stories with you.
One case involved a situation where the couple, as part of their divorce equitable division plan, was planning to withdraw a large sum of money from a retirement plan to pay off multiple debts. Fortunately, the mediator reviewed this idea with me. After gathering data and performing an analysis, I determined they would owe an estimated 48% in income taxes and the after-tax amount of the withdrawal would only cover an estimated 65% of the debt.
- Options were identified to deal with the various debt types in a more tax-efficient manner.
- The debt pay-off schedules were aligned with the future budgets of both parties.
- The retirement plan participant kept more money, enabling the desired retirement plan.
The other case related to a disparity in earning power between the 2 parties. The mediator working with the couple referred them to me to perform a divorce financial analysis. Part of that process includes projecting, and graphing, after-tax cash flow over 30+ years.
- When the better-positioned party saw what the future status of the other would be, some of the parameters of the separation agreement were revised to compensate for the difference.
- In addition, educational planning and funding was put in place for the less-prepared party.
In both cases, the entire family was taken care of, there were no losers, and everyone was ready to go - financially at the end.