While there is no requirement to hire an attorney to represent you in your divorce, it is generally recommended since the process is so complicated that it can often be impossible to ensure your rights are protected without a skilled legal advocate on your side.
While an attorney is typically essential to have in your corner, there may be situations where you want to have more specialized professionals looking out for particular areas of interest. A recent Cordell & Cordell podcast explored the various types of experts that could potentially be utilized in a variety of family law cases.
One of the most common experts retained in addition to an attorney during a divorce is a financial advisor to help oversee the intricacies of many aspects in a divorce settlement.
For those who do not already have their own accountant (which is probably most people), there is even a specific designation in the financial field, Certified Divorce Financial Analyst, for advisors who have completed education courses and passed an examination on the specific financial challenges that arise in divorce.
Depending on your circumstances, this can be an extremely valuable person to have on your side.
Benefits of a financial advisor in divorce
From expert insight on the short- and long-term impact of dividing property, to analyzing pension and retirement plans and helping draft a QDRO, to helping create a realistic budget and future spending plan, financial advisors can play a versatile role for anyone going through divorce.
They can be particularly helpful during periods of economic unrest such as when inflation is especially high or if the economy is in recession as the financial decisions you make tend to be magnified.
Your typical family law attorney will be familiar with the common tax, benefits and retirement issues that arise in divorce; however, these areas can require a much deeper understanding to fully take advantage of potential savings — or avoid unnecessary penalties.
Divorce attorneys are educated in legal principles and cannot possibly be expected to know everything a certified financial analyst knows as well, which is why having an advisor who is specifically trained to look into the nuances of financial matters can help catch many oversights.
For example, attorneys come across the basic concepts of child support and alimony on a daily basis and have a pretty good understanding how these work. But would your typical divorce attorney be able to glance at two investment accounts that seem similar on paper and be able to determine the tax liability associated with each?
Probably not — chances are the attorney would assume that they are roughly the same and not think twice about it. However, this could create a major inequity during the division of assets if each party takes an account but one has a much larger tax liability.
Having an expert to sift through the financial aspects of the divorce and advise the attorney frees your lawyer to focus on the legal aspects of building your case. You are also able to rest easier knowing that you have a professional on your side who is qualified to make sure your settlement is fair and that your immediate, as well as distant, future is protected.
Financial advisors are not just for the wealthy
Despite the popular misconception, financial advisors do not simply benefit the extremely wealthy — particularly when it comes to divorce.
Although it is true that those who have significant assets and a complex financial portfolio would benefit from the advice of an expert in this area, people in this scenario would already have their own CPA or advisor on the case.
However, when it comes to divorce, everyone from the middle class on up could often benefit from the advice and guidance of a financial expert.
Anyone who has been married for a long period of time, contributes the large majority of the household’s income, owns a business or has significant retirement assets can utilize the advice of a CDFA.
Divorce later in life has a nasty way of destroying any plans you have made for the future, so it is extremely important for those who do not have quite as much retirement flexibility to ensure everything is divided properly and that they are not leaving any money on the table or taking on unnecessary obligations in the settlement.
Although there will be an increased cost during the course of the divorce since you are hiring an additional expert, the potential savings and peace of mind knowing you have done everything in your power to ensure a fair settlement is often well worth the extra fees (which are typically significantly lower than an attorney’s).
Not everyone is a financial wizard, which is pretty universally understood. But when the stakes are as high as they are during a divorce, it is often prudent to get one on your side.