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A Certified Divorce Financial Analyst is an important member of your team of collaborative family professionals that will help you navigate your divorce or separation. A CDFA is your “financial coach” and will help you with the financial picture.
One of the first steps is to work with a Certified Divorce Financial Analyst to prepare an asset list separating the husband, wife, and the joint property. Property includes everything that was acquired (except by gift or inheritance) between the date of marriage and the date of separation or valuation date. Likewise, the debts are listed.
Generally, you will have options of how your marital assets and liabilities will be divided as you and your spouse prepare to go your separate ways. At this point, you need to think about your expenses going forward and project your cash flow (how much money will you have coming in and how much will you need to cover fixed and variable expenses). A CDFA can help prepare budgets and provide education around this stage of planning.
Tax consequences need to be taken in to account when considering the different assets. For instance, $100,000 RSP does not equal $100,000 in cash savings or equity in the family home. The RSP is taxed when the money is withdrawn and therefore not as valuable as the $100,000 cash. Pensions, particularly Defined Benefit pension plans can be complicated and need to be valued by a professional trained in that field, usually a Pension Actuary.
The most common question heard is – “Should I keep the family home?” There are financial and emotional issues involved in this discussion. A CDFA is not emotionally attached and can therefore provide unbiased financial advice. This particular question cannot be answered in isolation. A detailed financial plan will need to be prepared to consider the short term as well as the long term consequences of this decision.
It’s difficult to make big decisions when your life is changing but a CDFA can help. A CDFA will show how these decisions will impact you over the next few months, and more importantly, over the rest of your life.
So you are married or living together and one of you owns a property, and you are thinking about putting it in joint names. Tread carefully, this can be a minefield.
In my meetings with divorce and common law separation clients I observe that there are typically many divorces occurring at the same time for any one family experiencing separation.
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