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A Resource for Your Mediation Practice: How a CDFA® Can Bring Value to Your Clients

as published in NJAPM Mediation News, Vol. 23, Issue 2, Spring 2019

Money is an emotional experience that affects the quality  and overall outcome of your work.  It is understandable.  Divorce is the largest financial transaction some of our clients will face.  Clients may have investments including retirement accounts, pensions, businesses, and rental properties, that require additional financial information.  When faced with a complicated property settlement, how do you make sure that it is both equitable and avoids unnecessary  taxation?  Is it possible that some creativity could help your clients keep more of their own money?

CDFA® Credentialing
Certified Divorce Financial Analysts® are an alternative means of providing these financial resources to your clients and to your services.  Founded in 1993, the Institute for Divorce Financial Analysts provides specialized training to accounting, financial and legal professionals in the field of pre-divorce financial planning.  Over the years, they have certified more than 5,000 professionals in the US and Canada as CDFAs®.

Skills of the CDFA®
CDFA® professionals have the skills to do the detailed financial work for you, allowing you to focus on the legal issues at hand.  For example, as your clients progress through mediation and make changes, a CDFA® professional has the software tools to show you specific net after-tax cash flows given different scenarios.  This is particularly helpful when discussing alimony, child support and determining client financial needs.

Role of the CDFA®
The primary role of a CDFA professional is to address the specific financial issues of divorce with data that works to achieve equitable settlements.  They assist your client in understanding issues and finding reasonable expectations.  This includes the concepts of marital versus exempt property, valuing and diving property, division of retirement and pensions, spousal and child support, splitting the house, life-style analysis, forensic discoveries, executive compensation analysis and solutions to potential tax problems.

Case Study #1
Jane and John are financially struggling with young children and facing divorce.  John has controlled the finances up to now with little input from Jane.  The couple did not recognize the critical nature of their financial condition, so the mediator recommended my services as a CDFA® professional.  I received banking and credit card statements towards completing a life-style analysis.

My analysis demonstrated the problematic areas of their expenditures.  For example, we examined their percentage of restaurant and fast food spending and compared it to their grocery shopping expense.  They soon came to terms with Jane's online spending vs. John's over-indulgence on toys for the children.

The couple discovered that they were involved in excess spending on  non-essentials as a way to deal with the unhappiness of their marriage.  The clients prepared future budgets with realistic expenditures for each party, and were able to move ahead with realistic expectations of support for their divorce.

Case Study #2
Mary and Alex were a couple divorcing after 25+ years of marriage.  it was most important  to Alex that he continue to provide for Mary.  They had amicably decided their division of assets on their own but requested my advice to prevent possible mistakes.  Alex was retired and in pay-status for his pension.  Alex said he could not change beneficiaries after receiving benefits, but the couple assumed that Mary would automatically inherit the proceeds.

However, in my review of the plan documents, I discovered that if Alex were to die, all remaining benefits would be forwarded directly to Alex's estate unless there was either (a) a Court order or (b) New beneficiary assignments from Alex after the divorce.  I was able to assist the clients in completing their paperwork to ensure that as intended, Mary would receive Alex's pension benefits upon his death.

CDFAs® Assist in the Mediation Process
Acting as third-party neutrals, CDFA® professionals facilitate mediation by encouraging clients to review organized sets of information, explore additional options and create voluntary solutions.  They educate clients and provide clarity by demonstrating the short and long-term impact of multiple settlement options.

NJAPM is fortunate to have multiple Certified Divorce Financial Analysts® within our membership, each possessing a specialized set of skills.  If you wish, you may team with the CDFA® professional that best suits your needs by referring to our membership list on our website.

Diana M. Longo, CDFA, is a Certified Divorce Financial Planner and a mediator with Innovative Divorce Services, LLC, with offices in Fairfield, NJ.  She has been active in NJAPM since taking NJAPM's divorce mediation training in 2016.
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