Divorce designation aids in fair asset division

by Laura Scott

SBJ Contributing Writer

sbj@sbj.net

Divorce is no longer as simple as dividing possessions via his and hers lists.

Financial advisors have long advocated nancial planning for such major life events as marriage, buying a home, sending a child to college and retirement. Add divorce to that list.

It's increasingly common to hire a certied divorce planner to prevent nancial hardship after divorce.

"Hiring a CDFA is very new, but once it catches on it will be something that every divorcing couple will plan for their future," said Lisha Masters, a divorce attorney with Pratt, Fossard, Jensen & Masters who is also a certied divorce nancial analyst.

Using the expertise of a certied divorce analyst can provide the expertise and careful planning that can prevent regrets after a settlement is reached.

"Once a property division settlement is made, you can't go back and modify it," said Masters. "The services of a certied divorce nancial analyst will become an integral part of divorce law in the next three to ve years and should be now."

To become a CDFA, a person must complete a four-course series offered on a self-study basis through the Institute for Certied Divorce Planners, based in Southeld, Mich. It was founded 10 years ago by Carol Ann Wilson, a Boulder, Colo., nancial planner. There are now more than 1,000 certied divorce planners and specialists in the United States and Canada. Only a few are certied in the Springeld area.

Most nancial disasters resulting from divorce can be prevented with careful planning by a nancial analyst who is a neutral party, often either a CPA, attorney or nancial planner.

According to Jeremiah Mee, a CPA with Hlavacek, Morris & McIntyre PC, one of the biggest mistakes a couple makes when splitting their assets is failing to look at how each individual will be able to live on their portion of the settlement.

Mee, who also is a certied divorce nancial analyst, said that to determine how well a client can live on a settlement, he calculates the future benets of his clients, taking into consideration the value of their pensions, salaries, stock options, living expenses, tax implications and rate of ination. It's about making it more equitable, he said, which doesn't necessarily mean a 50-50 split.

"Usually after a divorce, the low wage earner never catches up to maintain their quality of life," he said. "The high wage earner usually surpasses their quality of life within two years. The easiest example is that the low wage earner, typically women, will have an emotional tie to the house where they raise their kids and have fond memories. They'd like to keep the house. This leaves more liquid assets to the high wage earner. The high wage earner typically takes cash, retirement plans and stocks and reaps the benets of appreciation, whereas the house doesn't have earning potential and can be costly to maintain."

The key is to look at the overall nancial picture to be certain you have a settlement sufcient to maintain the house. Sometimes, the smarter move might be to sell the house, split the proceeds and settle with a share of the spouse's retirement account.

"We run different scenarios to show how they will affect your livelihood in the future," Mee said. That includes calculating net worth after divorce as well as whether there will be enough to meet a spouse's needs after child support drops off.

Masters decided to obtain her credentials as a nancial analyst to help her clients, who are typically involved in high-asset divorce cases.

Though using a certied divorce nancial analyst is recommended for all couples with a net worth of more than $250,000, Masters said it also can be valuable to a couple with very little assets.

Masters recommends that couples nd a mediator before hiring an attorney. Mediators can be obtained through the Greene County Circuit Court's ofce. It can save time and attorney fees if a couple can nalize their agreement with a mediator.

A CDFA also can save attorney's fees while working on the nancial aspect of the settlement while the lawyer concentrates on aspects, such as child custody or child support.

CDFAs generally charge $125 to $150 an hour, plus a retainer of $1,000 to $1,500. Nationally, fees range anywhere from $500 to $2,500, Mee said. He said he will likely start at around $1,000. The average case takes about 12 hours.

Mee, who has 11 years of experience in public accounting, said with tax laws always changing and new tax-advantaged investments available, the CDFA certication helps him combine his knowledge with learning about the law.

Mee can testify in court. He can be hired either by an attorney or a private client. "Part of the certication is to have the backing and credibility to go to court as an expert witness," he added.

In the future, there will be more "collaborative" divorces, added Mee, which will include attorneys, mental health professionals to work with children's interests and analysts who will work together to reach a fair settlement.

"In a divorce, everyone has their own facts and circumstances," Mee said. "When one spouse isn't involved with the nances of the family, it leaves them at a disadvantage. They don't see the whole picture and in reverse, they might believe that nances are unlimited when they are (limited). It can be a reality check."