Winter 2018-19|volume 12|Issue 2

    Your Finances

    Q&A with a Certified Divorce Financial Analyst
    Mallory Labik

    Mallory Labik

    What can a CDFA advise you about?
    A CDFA professional is there to advise those who are possibly preparing for a divorce and need to comprehensively understand how that may affect their financial future. There are too many cases where people split assets in a manner they think is beneficial to them without performing the proper due-diligence. Often a settlement may fail to address their long-term needs.

    While going through a divorce, what are some of the benefits of working with a CDFA in addition to a divorce lawyer?
    A divorce lawyer has the legal knowledge and experience required to handle a divorce case. They are extremely valuable to have as a member of your team but may not be as equipped to handle some of the more in-depth financial questions and scenarios.

    A CDFA possesses the financial knowledge and expertise to carefully review the details of each divorce case. They are responsible for understanding the family’s assets, determining the client’s financial needs, and projecting the future circumstances of each potential settlement. A client’s settlement may be proposed without being thoroughly evaluated to determine how they will be positioned financially in the long term. That’s where CDFAs can show their value.

    What are some of the most important financial issues that need to be addressed during the divorce process?
    When going through a divorce, it’s important to get a solid summary of your assets. Often in marriages you’ll find that one spouse handles the finances, and the other spouse may not have a thorough understanding of the assets and liabilities that are shared. To properly evaluate and reach a potential settlement, we need to have a concrete understanding of a couple’s financial situation.

    Another item that is often overlooked is the impact taxes can have on different types of accounts. Withdrawals on retirement accounts are taxed differently than a personal account, and sometimes they can incur a penalty. Some securities held within a personal account may have larger taxable gains than others. Without a detailed review of your tax situation, there could be a significant negative impact on your portion of the settlement.

    What kind of schedules/projections does an organization such as Fragasso Financial Advisors prepare during a divorce?
    Fragasso projects an individual’s assets into the future so that the ramifications of a proposed settlement are clearly understood. Our projections take into account growth, inflation, taxes, and specific details unique to each case. In order to fully understand what our client needs, it’s important to be as detailed as possible when running an analysis. We can determine if a settlement proposal would be enough for a client’s survival; and if it’s not, we can identify possible solutions.

    How do we continue to help clients after the settlement?
    After a divorce, you will have an entirely new set of financial circumstances. In many cases, it’s the first time an individual may be responsible for making financial decisions independently. New accounts need to be established, beneficiaries need to be updated, alimony and child support payments need to be protected, and an overall financial projection needs to be consistently updated.

    Fragasso Financial Advisors can provide clear, concise, and detailed guidance during this transition period and well after. Though your divorce may be over, your finances will still need to be continuously updated and reviewed. The information we can provide will guide you to make well-informed financial decisions throughout your life.

    Investment Advice offered through Fragasso Financial Advisors, a registered investment advisor.
    *The CFP and CDFA abbreviations used above are all: CFP®, CDFA®