- Provide guidance through the financial maze during and after divorce.
- Provide analysis and illustrations customized to your divorce.
- Present reports to your attorney to show the impact of potential settlement proposals.
- Provide a full and complete explanation of your reports so that you understand their content.
- Help you understand the financial issues of personal vs. marital property, tax problems and solutions, splitting the house, valuing and dividing property, retirement and pensions, alimony and child support, etc.
Knowledge of financial strategies can make a world of difference in your divorce directly affecting:
- The cost of your divorce
- Your ability to stay in your home
- The amount of money you pay or receive each month
- The amount of money and property you have after your divorce
- The money available to start a new life
- Many people find out too late that they could have ended up with more money, property or income if they had better information about divorce and money. So, it’s in your best interest to prepare well and apply sound financial strategies early in the process. Avoid costly mistakes and take charge of your financial future today.
The financial issues inherent in every divorce case are often the ones that are the most overlooked. However, once a divorce settlement has been signed, it’s too late to change it.
Who should keep the house? How much will it cost to live post-divorce? How much alimony is there going to be and for how long? Will the custody arrangement affect child support? How can the retirement accounts be split and the money accessed? How can a business be offset? How should a business be valued? What is the value of health care benefits? Most important of all, will the clients be able to financially survive and thrive with the settlement post-divorce?
Certified Divorce Financial Analysts™ are trained to answer these questions and more for men and women in the process of divorce and to provide litigation support for their attorneys, which help them prove and often settle their case.
A lifestyle and income analysis is done to allow the parties to understand the inflows and outflow of the marital estate pre- and post-separation. It establishes the parties’ marital standard of living to be used as a benchmark during the divorce settlement.
Our process involves utilizing QuickBooks to data input each expenditure (cash, check, debit & credit card charges) into court defined expense categories related to housing, vehicle, insurance, children and personal expenditures. The annual amount is then divided into a monthly average need amount. Adjustments may be required to reflect anticipated post divorce changes in expenditure needs.
This analysis provides the information required for support requests and settlement analysis. This also helps provide information to prepare a budget while in and after the divorce process.
Division of Marital Assets
The division of marital assets is a complex process that requires an understanding of case law, state statutes, federal tax regulations and valuations. The objective is to capture the tax-effected values of the parties assets and liabilities and recommend a division of such assets to each party.
Settlement Planning
In this role, we help you see the overall picture by providing a snapshot of your financial situation and analyzing potential settlement scenarios. We will present our analysis in the form of spreadsheets, charts and graphs that outline the projected cash flow, net worth and tax impacts of each party in each scenario. Then we discuss the pros and cons of each option with the client and the attorney so that a strategy can be developed and pursued.
Once we have setup the models, we can provide on-the-spot analyses during mediation, facilitation or negotiations to help resolve property distribution questions and examine the pros and cons of different settlement proposals.
Alimony and Child Support Analysis
The determination of alimony takes into consideration the income and/or imputed income of both parties as well as the lifestyle needs of the non-moneyed spouse along with the moneyed spouse’s ability to pay. Alimony calculations must also be tax impacted as the payer can tax deduct the payment and the recipient must include alimony received as taxable income.
The total monthly child support amount is typically governed by state statute. The award total award then is proportioned between the parties based upon their respective incomes.
Pension Valuation and Allocation
The parties may have pension benefits that include pre-marital and marital vesting portions. In such cases, the pension benefits must be allocated between marital and non-marital categories. The non-marital portion is not divisible as a marital asset.
Pension benefits can be divided between the parties either by dividing the future monthly benefits between the parties, or by calculating a lump sum present value to be utilized in the division of marital assets.
Tax Analysis
A tax analysis is a critical part of the divorce process. An analysis of current and/or prior year income taxes must be ascertained. The tax liability and or refund status must be appropriately identified and allocated to the parties.
Additionally, the assets must be tax impacted in order to create a fair distribution. For example, if one spouse keeps the marital home with a fair market value of $500,000 and a cost basis of $250,000, there will be no income tax due on the sale of the home. If the other spouse receives a brokerage account with a fair market value of $500,000 and a cost basis of $250,000, there will be a tax on the $250,000 profit at the time of the sale. Therefore, the value of the brokerage account should be reduced by the associated tax liability in order to create parity between the parties.
The financial professionals at Elias Consulting can help you take control of your finances by creating a complete picture of your assets, educating you on relevant issues, and developing a strategy to achieve your financial goals. Our role in this process is to help consolidate the global view of your financial information into an integrated picture of what your financial situation will be post-divorce.
When contemplating a divorce, the first professional that comes to mind is an attorney. Typically a financial advisor is not considered until after the divorce becomes final. Not all attorneys are experts with respect to answering financial questions. Your attorney is an expert in the law, but they do not necessarily know how to answer intricate financial details that concern tax issues, IRS rulings, capital gains, dividing pensions, etc. An attorney and a CDFA can complement each other, especially if your case is litigated. Divorce Financial Analysis, Inc. can act as an expert witness who has worked on your case right from the start.
If both husband and wife come to agree that they cannot compromise on their own private settlement arrangement, then selecting the right attorney becomes a very important decision. Having worked with many credible attorneys in the area, we can assist in matching both parties up with an attorney who will be an advocate for each party's specific needs and concerns. If there is ever a chance that you and your spouse will have outstanding issues, you’re probably better off having legal counsel from the start. We do not provide legal advice, but our expertise can cut the cost of a long court proceeding by paving the way to a fair settlement for each spouse.
Financial analysis conducted early in the divorce process can save time.
The average length of the U.S. divorce process is one year. In the beginning stages of the process, both parties spend a great deal of time trying to get a clear understanding of the financial aspects and terminology of the separation. A Certified Divorce Financial Analyst (CDFA) can explain all financial aspects of the pending decisions and help empower the client to make educated decisions throughout the proceedings.
Divorce Financial Analysis, Inc. can help you save money during the divorce process.
By retaining a CDFA at Divorce Financial Analysis, Inc., you can have a clearer view of your financial future. Only then can you approach a legal settlement that fully addresses your financial needs and capabilities. A legal settlement that floats back and forth between attorneys, without the client having a clear understanding of all financial ramifications, can be detrimental, time consuming and expensive. We can educate oiur clients by providing a thorough knowledge and understanding of the often-complicated financial decisions.
We can help you to avoid long-term financial pitfalls related to divorce agreements.
Working with a client and his / her attorney, we can forecast the long-term effects of the divorce settlement. This includes details of all tax liabilities and benefits. Developing a long-term forecast for your financial situation is far better than a short-term snapshot. Financial decisions must be made that not only take care of immediate family needs, but retirement needs as well. We can assist our clients with developing detailed household budgets to help avoid post-divorce financial struggles.
We can help you think through what the divorce will really cost in the long run and develop a realistic monthly budget during the financial analysis process.
Expenses such as life insurance, health insurance and cost of living increases must be taken into consideration when agreeing on a final financial settlement. We can reduce the amount of apprehension and misunderstanding about the divorce process. Misinformation and misconceptions about the divorce process can be detrimental. Many have false expectations that they will be able to secure a divorce settlement allowing them to continue with their accustomed style of living. Financial divorce analysis helps to ensure a good, stable economic future and prevent long-term regret with financial decisions made during the divorce process.
Financial issues involved in a divorce – especially high net worth cases – can often become rather complicated. Unreported income and hidden assets are often alleged in divorce proceedings, usually by the spouse who is either not running a business or has not been in charge of the family finances.
It is not uncommon for a spouse to hide assets, especially if the divorce has been planned for quite a while. People hide assets for a variety of reasons, but essentially, they have property or money that they do not want to have discovered.
There are numerous ways to find hidden assets, but typically assets are either placed in the hands of third parties or behind false documents. The process of finding assets or proving unreported income is often one of the most difficult assignments during the divorce process. Being familiar with ways individuals move assets into the hands of third parties or behind false documents and techniques to find those hidden assets can result in the discovery of this property.
The cost of such discovery work must be weighed carefully against the potential benefits. It is important for a budget to be planned for two levels of investigation. At the first level, formal discovery procedures such as interrogatories, depositions, subpoenas, requests to produce and motions to compel can provide information to review and analyze the marital and non-marital estates.
If an individual does not have a detailed list of assets and debts along with documents to prove the whereabouts of these assets, the discovery in identifying the “easy to find” estate can become costly. At this point, a decision has to be made as to whether further money should be spent on the second level of discovery, which investigates and traces transfer of ownership of assets into other individuals’ or entities’ names.
Is the cost of the investigation worth the potential value of the assets which are assumed, at this point, to be hidden? Through diligent and effective preparation, it is possible to discover assets not disclosed or acknowledged by the other party. It is important to create realistic expectations with the client as to the ability to discover assets which have been actively concealed, and the reality that – despite best efforts – it is sometimes impossible to locate willfully hidden assets.
The Divorce Financial Affidavit is the foundation from which all divorce settlements are built. The Financial Affidavit is used to determine child support, spousal support (also called alimony), and the separation of assets and liabilities to reach equitable settlements.
When divorce proceedings are commenced, each spouse is required to fill out a financial affidavit. This form, which becomes part of the court record, shows income from all sources, debt (or liabilities), living expenses, and assets. Each party swears (under the pains and penalties of perjury) that the information contained on his or her affidavit is true. A judge will use the information contained in this affidavit when he or she issues temporary orders regarding separate maintenance (temporary alimony), child support, and other financial matters during the period of separation. The document is useful to attorneys, as it becomes the basis for seeking (or arguing against) temporary support and assists the attorney later during the discovery and property settlement phases of divorce.