Divorce is a complex process that affects just about every aspect of your life — from financial to emotional, physical to legal. Unless you’ve been married for only a short time — and have no property, assets, or children — you’ll probably need some professional help to get you on track to a healthy, happy post-divorce future.
The central figure in your divorce process — aside from you and your spouse — is your lawyer, but other professionals can help to smooth the road ahead of you.
Here’s a guide to help you choose financial professional to help you through the process.
A Certified Public Accountant (CPA) handles the financial matters of your case. His or her responsibility is to calculate your net worth, your spouse’s net worth and to produce figures that are agreeable to both you and the courts.
There are a number of different accreditations given to accountants, and you’ll find these designations after their name. Wading through the differences between someone who is a CFE (Certified Fraud Examiner) or a BCFE (Board Certified Forensic Examiner), or a member of the ASA (American Society of Appraisers), or who has a NACVA (National Association of Certified Valuation Accreditation) may seem a daunting task.
Make sure that you choose an accountant with the letters “CPA” after his or her name.
Finding an accountant
The Department of Consumer Affairs in California (916-323-7018) can provide you with a list of accountants, and may be able to recommend one experienced in matrimonial law.
However, it may be easier to find an accountant through your lawyer. These two members of your divorce team may have to work in tandem from time to time, so it’s important to find someone your lawyer is familiar with. “Most divorce lawyers select the accountants themselves,” says L.A.-based CPA David Swan. “Typically, a lawyer will have a relationship with a forensic accountant that he or she likes to use. You should ask your lawyer why he or she recommends a certain accountant — maybe they’ve worked together for a long time, or they speak the same language, or they have a symbiotic relationship.
“The first thing you should recognize is the difference between ordinary CPAs and forensic accountants,” Swan continues. “Most CPAs don’t know enough about family law or taxes; with them, it’s a combination of wasted time, money, and energy. But a forensic accountant will know more about the specific areas. You’re looking for an expert, a specialist.” Dan Close, a CPA who practices in San Diego, agrees: “Look for somebody who has had experience working with attorneys, courts and judges in divorce matters,” he adds.
Other important factors include the accountant’s qualifications, your comfort level, and how the accountant interacts with your lawyer. Look for an accountant who is honest and forthright, and who offers reasonable economic terms. “You should interview the accountant beforehand,” Close adds, “to make sure there are no personality conflicts, and to establish a good working relationship with him or her.”
Your financial planner
Especially when your marriage has been dissolved, and even during the divorce process, you may want to employ a Certified Financial Planner (CFP). A financial planner’s job is to give you an understanding of your financial needs. Divorce inevitably creates changes in your financial situation, and you may need some help in adjusting to your new lifestyle.
A CFP can help you with budgeting, or assist with tax, estate, or retirement planning. He or she will help you organize your financial future by proposing a personalized plan with a time horizon, and a solid investment strategy to help you towards financial stability for tomorrow.
“As far as finding an investment advisor, make sure you interview a few different people. Make sure they understand the situation, and that they’re willing to work with other advisors,” states Cynthia Higgins, an L.A.-based CFP. “Either ask professionals for referrals, or ask your friends who have similar financial situations — although your friends may have different objectives, so make sure they’re working with you.”
A CFP can reduce the uncertainty about the future by forecasting the economic effects of alternative settlement proposals. For instance, a CFP can tell you what the economic consequences will be of “trading” the house for a pension, or of keeping one asset over another.
Finding a financial planner
There are two organizations you can call for a referral to a financial planner practicing in your area:
- Institute of Certified Financial Planners: (888) 828-4237
- International Association for Financial Planning: (800) 945-4237
The Certified Planner Board of Standards can provide a CFP licensee’s date of certification, current status, and any past or current disciplinary actions against the planner by the Board:
- Certified Financial Planner Board of Standards: (303) 830-7500. Website: www.CFP-Board.org
Your divorce planner
A Certified Divorce Planner (CDP) is a financial professional — often also a CFP or a CPA — who has specialized skills and experience that enables him or her to analyze financial issues in divorce in their long-term context.
CDPs receive special training in divorce-related financial issues such as tax and property division. After completing the ICDP training and passing the exams, CDPs also receive special software enabling them to produce charts and graphs that will show a client the results of choosing one scenario over another.
A CDP can take the offer on the table and project out 5, 10, 20 years to show you what you’ll have to live on if you sign the agreement. If the projections show that you’re going to run out of money after 18 months, you’ll need to renegotiate your agreement. That’s why it’s so important to meet with a planner before you sign your agreement.
If this advice comes too late for you, meeting with a CFP or CDP might still be worthwhile: he or she can help with short- and long-term financial planning.
Financial professionals who have met specific education and experience requirements have been designated Practitioner Members by the ADFP or Certified Divorce Planners by the ICDP.
Finding a divorce planner
Both of these organizations maintain referral services:
Association of Divorce Financial Planners: (800) 270-1886
Institute for Certified Divorce Planners: (800) 875-1760, or visit their website at www.institutecdp.com.
Questions to ask a prospective financial pro
Once you’ve set up an initial interview, there are a number of questions you should ask to make certain you’re dealing with a competent professional — and someone who’s right for you.
- How many times have you been to court? Your accountant may be testifying on your behalf about all your financial secrets, and you want someone who has a fair amount of experience in the courtroom. If possible, find out how these cases turned out.
- Have you worked with many lawyers? Ask for a few references and call them; you don’t want to find out your accountant has been moving around from firm to firm because of bad practices rather than exceptional skill.
- What do you think the outcome will be? Ask the accountant to predict the process and estimate your chances of getting what you want. What does he or she think is going to happen?
- How much are your services going to cost? This is an important question in any situation. Ask about the terms of payment, when and how services will be billed. Remember that once a fee is agreed upon and a contract is signed, any additional fees should be by prior written agreement only. You may want to add this to any contract you sign, if it’s not already there.
How to work with your financial pro
When you sit down at the initial interview, you may choose not to bring any important paperwork with you. It’s important to establish a good rapport. It’s a meeting of personalities, and you’re looking for respect, understanding, and an ability to talk freely.
However, once you start into the financial legalities of the case, there are several important documents your accountant or planner will need to see:
- personal tax returns for you and your spouse for the last five years
- books, records, financial statements, and tax returns for any businesses in which you or your spouse has an interest
- banking and credit-card statements
- mortgage statements
- telephone bills
- other records of major expenditures
- stocks, bonds, mutual funds, and equities
- retirement plans
- all insurance policies
- descriptions of your and your spouse’s employee benefits
- your latest pay stubs
You’ll also need valuations or other paperwork detailing property you and your spouse own together or separately — from the contents of a safety deposit box to the car to your home. Although you’ll be dealing mainly with “big ticket items” here, if something is very important to you, make sure it’s on your list. If a business is involved, brokerage statements or corporate minute books will also be required.
Basically, your accountant or planner needs to see any major paperwork that involves the transaction of money — for both you and your spouse.
Financial tips to help you through your divorce
“Hold on to all your financial records, such as bank statements, tax returns, and deeds. Don’t let your spouse carry them out of the house. Get them to your lawyer; cases are won or lost based of the availability of documents. Even if they’re replaceable, it costs a lot of money.”
— David Swan, CPA
“Take your time in making decisions; don’t act now and think later. Never let anyone pressure you into making a decision quickly.”
— Cynthia Higgins, CFP
This Article Financial Professionals was written by Diana Shepherd