Avoiding Costly Mistakes in Divorce

By Lis McNealey Davies, CDFA®
Owner, Financial Advisor

The Arlington Group has helped dozens of clients navigate the tricky financial issues that arise through the divorce and separation process. We believe working with a Certified Divorce Financial Analyst (CDFA®) can make all the difference, and that’s why we have two CDFAs on our team. Here are some guidelines on what to be prepared for during this life transition.

1. Why consult a CDFA® before divorce or separation?

A Certified Divorce Financial Analyst (CDFA®) is a financial professional with specialized training to analyze the financial complexities of divorce and guide you through the process with clarity. They help you understand the short- and long-term financial impacts of your decisions, ensuring you avoid costly mistakes. For example, you might be tempted to fight for the family home, but a CDFA® can help you evaluate whether you can realistically afford it post-divorce or if selling it and dividing the proceeds is a better option. Engaging a CDFA® early gives you the tools to make informed decisions.

2. Division of assets is more complex than you think

It’s not just about splitting what’s in your joint bank accounts. Dividing retirement accounts, investments, and even debts requires careful attention to detail. Many people overlook tax implications, such as penalties for early withdrawals or the taxable value of certain assets. A CDFA® can help ensure the division is equitable and tax-efficient.

3. Hidden financial pitfalls

Divorce can uncover financial surprises, such as hidden debts or assets. A CDFA® works to uncover these, providing transparency and helping you negotiate from a position of knowledge. They can also analyze lifestyle expenses to determine if the proposed settlement supports your needs.

4. Building your post-divorce spending plan

Many people underestimate how much their financial life will change after a divorce. A CDFA® can help you build a post-divorce spending plan that reflects your new reality. This includes accounting for child support, spousal maintenance, and changes in income.

This is also a time to focus on long-term financial goals, such as retirement planning, education funding for children, and rebuilding savings. Working with a CDFA® can help you better plan for the future.

Our Certified Divorce Financial Analysts can help your financial situation and give you confidence in the end result. We can even work hand-in-hand with your attorney to help take much of the stress out of an already stressful situation.

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The use of the CDFA designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firms or its associates are acting as experts in this field.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.