What is a 'Certified Divorce Financial Analyst - CDFA'

A Certified Divorce Financial Analyst (CDFA) uses their knowledge of tax law, asset distribution and short- and long-term financial planning to achieve equitable divorce settlements. The best-case scenario for two people divorcing is that it’s amicable and both parties agree on the division of assets. In this case, you might only need a neutral mediator just to help with paperwork. Some divorces that don’t involve property, retirement accounts, children or large sums of money might even be completed by following a few simple steps online.

However, divorce after many years of marriage with two conflicted people almost always requires the hiring of two attorneys — one to represent both parties. Unfortunately, court dates, attorney meetings and negotiations all add up to time, and time means a whole lot of money to attorneys.

BREAKING DOWN 'Certified Divorce Financial Analyst - CDFA'

Hiring yet another professional may not be ideal. However, some situations call for a Certified Divorce Financial Analyst (CDFA). While this person cannot provide legal advice, unless, of course, he or she has a license — a CDFA can provide in-depth financial analysis and advice to the attorneys and divorcees relating to the divorce.

The Divorce Process with a CDFA

Information provided by the clients and attorneys is used to analyze proposals for the division of assets, alimony, custody, child support, etc. CDFAs can then project the financial impact of a proposal in the short and long-term, and formulate different options that may leave both parties in better positions post-marriage. They can even give absolute values to assets that may be under or overestimated.

According to lawyers.com, a CDFA might be a good fit if couples own a business together or have significant property to better understand the value of their assets and debts. Additionally, they can create a post-divorce budget, so you have a financial plan moving forward.

In a nutshell, CDFAs are best at providing advice on:

  • valuing assets and debts
  • valuing the marital home
  • dividing retirement and pension accounts
  • the amount and duration of alimony
  • tax implications of alimony and property division, and
  • setting up a budget for life after the divorce.

CDFAs go through a rigorous process to become this type of professional. They must have two years of financial planning or legal experience. Then, after attaining the proper work experience, candidates are required to complete a four-step modular program and pass an exam designed by the Institute of Divorce Financial Analysts (IDFA). The self-study program covers financial and tax issues based on divorce settlement case studies. To become a CDFA, a person must have two years of financial planning or legal experience. After attaining the proper work experience, candidates are required to complete a four-step modular program and exam designed by the IDFA. The program is a self-study system, covering financial and tax issues, with case studies of divorce settlements.

While a CDFA may be knowledgeable about divorce law, he or she should never be hired in place of an attorney.

  1. Certified Financial Divorce Practitioner ...

    A Certified Financial Divorce Practitioner is a member of the ...
  2. Legal Separation

    Legal separation occurs when a married couple decides to live ...
  3. Equitable Division

    Equitable division is a legal theory guiding how property acquired ...
  4. Alimony

    Alimony is court-awarded payments made to a lower-earning spouse ...
  5. Section 1041

    Section 1041 of the Internal Revenue Code mandates that any transfer ...
  6. Eligible Transfer

    An Eligible Transfer is a movement of assets between a retirement ...
Related Articles
  1. Personal Finance

    Become A Certified Financial Divorce Analyst

    Use your financial knowledge to help people preserve their financial integrity after a failed marriage.
  2. Personal Finance

    How to Achieve Financial Goals During a Divorce

    This is what needs to be considered to achieve a desired financial outcome in divorce proceedings.
  3. Insights

    How Divorce Can Adversely Affect The Economy

    Divorce not only affects the people involved, it also affects the nation's economy.
  4. Financial Advisor

    5 Tips for Cutting Divorce Costs

    A divorce can be difficult and expensive, but there are several ways for you to minimize some of costs associated with the process.
  5. Insurance

    Can Divorce Insurance Keep You From The Poorhouse?

    Divorce rates are estimated to be between 40-50%, and you could lose as much as 77% of your net worth.
  6. Personal Finance

    The Best And Worst Times (Financially) To Get Divorced

    Divorce is rarely financially advantageous to either party. There are times, however, when it can have an even deeper impact on your personal economic situation.
  7. Personal Finance

    Where Will You Live After a Grey Divorce?

    Couples who divorce later in life can use a home equity conversion mortgage to cover housing costs.
  8. Personal Finance

    10 Mistakes to Avoid When Divorcing Over 50

    It is not easy growing old, especially when you decide to divorce. Learn how to avoid money trouble if you decide to divorce your spouse after age 50.
  9. Personal Finance

    Securing Life Insurance for a Divorce Settlement

    It’s essential for couples to understand how life insurance plays into a divorce settlement.
  10. Personal Finance

    Ways to Handle Who Gets the House in a Divorce

    Divorcing couples need to consider the different options for what happens to the family home and the financial implications of each.
  1. My husband left his ex-wife as his retirement plan beneficiary. Can this be changed?

    Even when assets are divided following a divorce, in many cases, former spouses and heirs engage the services of attorneys ... Read Answer >>
Trading Center