Module 1: The Current State of Divorce and the CDFA Professional Flashcards
Which of the following tasks can a CDFA professional perform without having additional training?
A) Complete legal documents.
B) Act as an expert witness.
C) Appraise a business.
D) Prepare a tax return.
B) Act as an expert witness.
Jacob is divorcing his wife, Andrea. Jacob has hired Michelle, a CDFA professional, to work on his divorce case. Which of the following actions are appropriate for Michelle?
A) Michelle will need to analyze Jacob’s financial information and audit Andrea’s financial information.
B) Michelle will need to analyze the financial information for both Jacob and Andrea.
C) Michelle will only need to analyze Andrea’s financial information.
D) Michelle will only need to analyze Jacob’s financial information.
B) Michelle will need to analyze the financial information for both Jacob and Andrea.
A CDFA professional should review both parties’ financial information to do a complete and thorough job and make recommendations that are fair and equitable to both parties.
Which of the following is NOT an appropriate service that CDFA professionals can provide?
A) Provide litigation support relating to financial issues.
B) Determine the financial impact of the proposed settlement.
C) Prepare a report showing the financial impact of one spouse keeping the family home.
D) Prepare business valuations and analysis.
D) Prepare business valuations and analysis.
Unless a CDFA professional is trained in business valuations, he or she should not prepare business valuations and analysis.
Which of the following is NOT a reason for a CDFA professional to interview clients?
A) To collect financial data
B) To develop a budget
C) To complete answers to interrogatories
D) To help them identify their financial goals, including retirement objectives
C) To complete answers to interrogatories
A CDFA professional is not trained to interview clients to complete answers to interrogatories. This is something that the attorney would complete.
A ________________ is an individual who has been trained to assist people in coming to an agreement.
Mediator
A mediator is an individual who has been trained to assist people in coming to an agreement, especially one that reconciles differences between disputants.
Which of the following is a common mistake that divorcing couples make?
A) Failing to consider the taxes due on child support payments
B) Dividing a joint checking account to obtain an equitable distribution of assets
C) Using the cost basis to determine taxes on the sale of property
D) Failing to consider the tax consequences of an early withdrawal from a retirement account
D) Failing to consider the tax consequences of an early withdrawal from a retirement account
Funds withdrawn from a retirement account before the age of 59 ½ will be subject to additional income tax as well as an early withdrawal penalty. It is important that the client understand the impact of this decision.
What impact have the “no-fault” divorce laws had on divorces in the United States?
A) An increase in the number of divorces
B) An increase in the amount of child support that is paid
C) An increase in the amount of spousal support that is paid
D) A decrease in the number of divorces
A) An increase in the number of divorces
Divorce rates have increased since California in 1970, and all other states (except New York) by 1985, enacted no fault divorce laws.
From a client’s perspective and without regard to the cost, at which of the following times should an individual hire a CDFA professional?
A) After meeting with an attorney
B) After filing a petition for divorce
C) When considering getting a divorce
D) Prior to a final judgment for divorce
C) When considering getting a divorce
The best time to hire a CDFA professional is when the client is considering getting a divorce. For example, it may be easier to gather financial information before the other spouse knows about the divorce. There may also be Social Security and health insurance planning issues that necessitate postponing the divorce.
In a divorce settlement, what mistake is commonly made by financial professionals without proper training?
A) Considering inflation
B) Considering only an equal division of property
C) Considering investment returns
D) Considering the tax consequences of the sale of property
B) Considering only an equal division of property
An equal division is not necessarily an equitable division. In many cases, one spouse sacrificed his or her career for the other spouse. In those cases, it may not be equitable to divide the property equally.
A CDFA professional is able to give legal advice under which of the following conditions?
A) The CDFA professional must seek and obtain permission from the client’s lawyer before giving legal advice.
B) The advice must be limited to the division of marital assets and debts.
C) A CDFA professional is not able to give legal advice under any conditions.
D) The advice must be limited to recommending levels of spousal support.
C) A CDFA professional is not able to give legal advice under any conditions.
A CDFA professional is not qualified to give legal advice under any conditions.
An individual who is trained to calculate statistically risks, premiums, and life expectancies for insurance and pension plans is referred to as a/an _______________.
Actuary
An actuary is a person whose work is to calculate statistically risks, premiums, and life expectancies for insurance and pension plans.
