peace of mind in divorce

Divorce is emotionally draining for both spouses. The decision to divorce is never easy, especially when it comes to children. In a relatively short period of time, there are decisions the couple must make that will affect the rest of their lives. Many clients sign divorce papers wondering if they received a good settlement and how it will affect the rest of their lives. How can someone be sure that they will get the best deal during divorce negotiations? A Certified Divorce Financial Analyst (CDFA) can help.

CDFA helps clients understand the short-term and long-term financial impacts of any proposed divorce settlement. They also provide valuable information on other financial topics related to divorce, such as tax consequences, splitting pension plans, continuing health care coverage, stock option elections, and much more. In addition, the CDFAs provide expert testimony in trials and arbitrations. They can provide attorneys with the tools they need to prevail in court.

North Carolina is an equal distribution state. Most people think of equitable distribution as a 50/50 split of assets. This is rarely the case. The amounts paid for the house, any investment owned by either spouse, or a family business affect the tax implications when the asset is sold. During deal negotiations, it’s important to compare apples to apples so the client can see how the proposed property deal will affect their value and working capital starting today.

One of the most important problems that a person faces is to maintain a positive cash flow to be able to pay the bills on a monthly basis. To meet cash flow needs, there are several sources of money that may be available: (1) martial property; (2) alimony; and (3) spousal support.

Child support is determined by the North Carolina State Guidelines; and are designed to provide adequate support awards that are equitable to the child and the parents. As a CDFA, I provide reports for my clients that help the attorneys and the court decide what amount will be fair to both parents. It removes the emotional aspect of negotiations.

Spousal support in North Carolina is based on 16 different factors. While child support is a sure thing if the mother has full custody of the children, spousal support is not. The two main factors the court looks at are need and the spouse’s ability to pay. For example, one of my clients was offered $35,000 a year for 5 years. This sounds like a lot of money and a fair offer. However, after we budgeted for her, we noticed that she missed the COBRA premiums she would have to pay for health insurance after the divorce. There were also other key expenses that she left out. After accounting for inflation and taxes, she would run out of money in 3 years. Therefore, what seems fair is not always fair. In addition to determining need and ability to pay, there is also the decision as to whether alimony would be modifiable or non-modifiable. This could have a huge impact on my client’s future cash flow.

The third source of money is marital property. Marital assets include real estate, 401(K) contributions from a spouse’s paycheck, savings accounts, investment accounts, etc. Typically, most divorces are settled with a 50/50 split. However, it does make a difference as to which 50% a customer receives. All assets are not created equal. Women are emotionally tied to the house and most of the time they want to keep it. However, if they can’t afford the payments and upkeep on the home, they may be forced to sell earlier than anticipated. So who pays the closing costs and commissions? They do. What if they are forced to sell at a time when the housing market is down, or if they are forced to transfer their children to a different school district? The point is that if my clients want to keep the house, they need to determine if they can afford it before they sign the divorce papers and not after.

The attorney and CDFA work hand in hand to obtain the best financial settlement for their client. The CDFA will prepare a report showing the client and attorney the impact of the proposed settlement over a 20-year period taking into account inflation and taxes. Thus, the client does not have to wonder how the settlement will affect him in the long term, he will know. This type of financial analysis works well in meditation and collaborative law as well.

At the end of the divorce process, it is important that both parties walk away with the peace of mind that the settlement they received is fair. I wish these services were available when I was going through my divorce. I was young and scared to death of my abusive husband. I would have done a lot of different things if I had someone to educate me on what the financial future would be for me. Divorcing clients live to survive today. They are not thinking about their financial ability to survive in the future. Unfortunately, at the most vulnerable time in a person’s life, they must make some of the most important decisions that will affect them and their children for years to come. With only one chance to come to an agreement, they cannot afford to make any mistakes. As a CDFA, it’s my job to guide my clients through the process and encourage them along the way. It is a call I do not take lightly. Additional financial burdens after divorce can only impede the healing process. I try to improve the lives of my clients today and help them look for a better future for tomorrow.

If you or someone you know is going through a divorce and would like to discuss how I can help, please call me at 336-854-8500 or write me at 3300 Darden Road, Greensboro, NC 27407. My email address is cdamba@aol .com

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