CDFA - Module 1 Flashcards
What is the financial impact of divorce?
Divorce affects finances significantly, with common mistakes involving the marital home, support payments, retirement assets, and tax implications.
What are common errors in handling the marital home during divorce?
Retaining an unaffordable home, overlooking property cost basis, and misunderstanding capital gains taxes.
Why is structuring child and spousal support properly important?
Improper structuring can lead to tax inefficiencies, lack of life insurance protection, and financial instability for recipients.
What issues arise with retirement assets in divorce?
Failing to evaluate pensions correctly, misunderstanding Qualified Domestic Relations Orders (QDROs), and neglecting survivor benefits.
What role does a Certified Divorce Financial Analyst (CDFA) play?
A CDFA provides financial expertise during divorce, analyzing settlements for tax impact, property division, and long-term financial planning.
What is a key challenge in dividing property equitably?
Equating retirement and non-retirement assets without accounting for tax implications and liquidity differences.
How have no-fault divorce laws impacted divorce rates?
No-fault divorce laws led to an initial increase in divorces but rates have stabilized below 5% since 1985.
What is the “Gray Divorce Phenomenon”?
Divorce among individuals over 50 has doubled since 1990, with unique financial and emotional challenges.
How does a CDFA assist attorneys?
By providing financial analysis, data on settlement impacts, and ensuring informed decision-making for equitable outcomes.
Can a CDFA provide legal advice?
No, CDFAs can only offer financial insights and must avoid giving legal recommendations.
What financial mistakes can occur without a CDFA?
Misvaluing assets, ignoring tax consequences, and failing to project long-term financial outcomes.
