Divorce Divorce Financial Planning

Question 1

What is a 'Certified Divorce Financial Analyst' (CDFA)?

Accepted Answer

A financial professional trained to help clients understand the long-term financial impact of divorce settlements

Answer

A CDFA is a financial advisor specially trained to analyze the long-term financial consequences of divorce settlements and help clients make informed decisions.

Question 2

Why is it important to consider tax implications when dividing assets in a divorce?

Accepted Answer

Different assets have different tax consequences, meaning a $100K IRA may be worth less than $100K in cash after taxes

Answer

Assets like retirement accounts carry embedded tax liabilities — a $100,000 IRA will be taxed upon withdrawal, making it worth less than $100,000 in an after-tax brokerage account.

Question 3

What is a 'financial disclosure' requirement in divorce?

Accepted Answer

Both spouses must fully disclose all assets, debts, income, and expenses to the court

Answer

Financial disclosure requires both spouses to provide complete, honest documentation of all their finances, including income, assets, debts, and expenses, under penalty of perjury.

Question 4

What is the danger of 'hidden assets' in a divorce?

Accepted Answer

One spouse may receive an unfair settlement if the other conceals assets from the court

Answer

When a spouse hides assets, the other spouse may receive less than their fair share; courts take asset concealment seriously and can reopen settlements if discovered.

Question 5

What is a 'QDRO' used for when dividing retirement assets?

Accepted Answer

A court order that transfers a portion of a retirement account to the other spouse without tax penalties

Answer

A Qualified Domestic Relations Order (QDRO) is a legal order that directs the administrator of a retirement plan to pay a portion of the benefits to the former spouse without early withdrawal penalties.

Divorce Practice Test

Divorce Practice Test

Divorce Divorce Financial Planning