Frequently Asked Questions
Question.
Answer. A CDFA is someone who has been certified by the Institute for Divorce Financial Analysts. CDFAs are trained and qualified to serve as financial experts on divorce cases, present powerful data to back up all options, and to educate clients on the financial implications of different divorce settlement proposals. The divorce settlement will in part determine your financial well being for many years to come. It is critical that it is soundly constructed. The guidance of ARMA Financial Services will help protect your interests. ARMA Financial Services will review all assets and incomes and will assist you in analyzing viable financial options for your future. ARMA Financial Services will assist you with the gathering, organizing and preparing of documentation of income, expenses, assets and liabilities, provide you with on-going financial education, guidance and analysis throughout the divorce process and provide you with projections for the long term impact of financial decisions
2 Question.
Answer. Many people go through divorce with false expectations and faulty information. Your attorney understands the legal ramifications of various settlement proposals, but may not have the training to assist you effectively in looking at the immediate and long term tax and financial impact of your settlement. It is not enough to just reach a financial settlement agreement. You must know the long term financial impact of your divorce. If you are uncertain about any of the following issues you should engage the services of ARMA Financial Services:
- What should we do about the house?
- What are my options for health insurance?
- Will I have enough after the divorce to pay my bills?
- Should each of us just keep our 401(k) or other retirement plans?
- Does it make sense to trade pension rights for the house?
- Will I have enough after the divorce to be able to retire someday?
- Who will pay for the kids’ college education?
- I need cash for a new down payment. How can I get it?
- Who should pay off the debts and when should they be paid?
- How can I guarantee I’ll still get child support if my ex-spouse dies?
- Net worth exceeds 1 million.
- Will there be alimony or child support?
- How are retirement assets to be divided (401k, pensions)?
- One spouse has little or no knowledge of the finances or feels that the other may be hiding assets
- One spouse earns much more than the other.
3 Question.
Answer. Definitely not. ARMA Financial Services highly recommends that any person going through a divorce seek legal counsel. Divorce is a legal process that requires professional advice, just as the financial aspects of a property settlement need analysis by a professional trained in the field. ARMA Financial Services can provide attorney recommendations if you do not currently have an attorney.
4 Question.
Answer. Maybe. Some attorneys are knowledgeable about the financial aspects of divorce such as tax issues, IRS rulings, capital gains, and pension issues. However many are not and although they play a crucial and lead role in the divorce process, they may not have the knowledge of the intricate financial details that help you to avoid costly financial mistakes. ARMA Financial Services will work closely with your attorney to assist you in achieving the most equitable financial settlement possible.
5 Question.
Answer. Attorneys are accustomed to collaborating frequently with experts. We are objective financial experts who uphold your interests as our first and only priority. We do not practice law, yet share a critical understanding of practical standards and state divorce laws. We supplement the attorney’s efforts with our expertise in areas of personal, business finance and will never contradict or undermine the attorney’s authority.
6 Question.
Answer. The Financial Advisor may know you and have your trust, but they probably do not have the interdisciplinary knowledge of divorce laws and finance, nor the experience to project realistic scenarios for support and asset division. Lastly, if your financial advisor worked with you as part of a couple, this financial advisor may have a conflict of interest if they continue to serve you both during and after the divorce.
7 Question.
Answer. Your financial information is STRICTLY CONFIDENTIAL and is subject to our strict Privacy Policy. Your information will never be shared or discussed with anyone without your prior consent.
8 Question.
Answer. As early as possible. You need our experience and expert advocacy to help you identify your goals, priorities and needs from the very outset. We may also be able to direct you to take actions that may lead to a more favorable and satisfying solution. At the point when you are considering getting a divorce is the time to consult ARMA Financial Services. Waiting too far down the road may limit your options and may result in less desirable outcomes.
9 Question.
Answer. In a divorce each party experiences a significant shift in their financial situation. Understanding the impact of financial decisions in both the short and long term as they pertain to your lifestyle is knowledge that is priceless. By using ARMA Financial Services you will have a clear view of your financial future. Services are usually billed on an hourly basis under a retainer agreement. We believe that the benefits of retaining ARMA Financial Services far outweigh the costs when considering the devastating impact of accepting a financial settlement that has not been reviewed for its long term implications.
10 Question.
Answer. Obtain copies of all pertinent financial information. Make copies of tax returns, paycheck stubs, real estate evaluations, information on your mortgage, copies of insurance policies, investment accounts, checking accounts, savings accounts, credit cards – any and everything that has to do with your marital finances. You may seek the services of ARMA Financial Services before you actually separate. Many clients have benefited from pre-separation planning. When your divorce does actually occur you will be well prepared.
11 Question.
Answer. A CPA usually focuses on tax issues and as such they don’t often make future projections. Also unless a CPA is also a divorce practitioner regularly working with the issues surrounding divorce they may not be familiar with alimony and pension valuations. Also, your CPA may have a conflict of interest if both you and your spouse are clients.
12 Question.
Answer. Absolutely. As part of our divorce financial planning service, we offer you the opportunity to participate in post-divorce financial planning. We will send you a data form and ask you to complete it based on your newly acquired divorce assets. We will examine your spending needs, individual insurance and estate planning needs, help you plan for your children’s college education, and help you plan, or stay on course, for retirement years.
13 Question.
Answer. ARMA Financial Services is a comprehensive wealth management and financial planning firm. Your needs are individual and specific. We will be glad to set up a consultation to discuss how we may be of service to you.
14 Question.
Answer. A significant part of the divorce financial analysis process is dedicated to achieving favorable spousal support outcomes. That being said, no two divorce cases are alike – we will work with your attorney to focus on your particular situation. The “tests” for evaluating alimony/spousal support/maintenance include:
- Need: Can you support yourself with earned income plus investment income?
- Ability to Pay: Does the payer of the alimony have sufficient funds to pay it?
- Length of Marriage: A long term marriage (10 years or more) generally is a stronger case for the lower earning spouse.
- Previous Lifestyle: Roughly speaking it takes into account how you lived your lives prior to the divorce, perhaps with some modifications.
- Age and Health of Both Parties: May be impacted if major wage earner is retired, is disabled or in poor health, or may never have worked, etc.
15 Question.
Answer. This is a great question, because it is one of the most overlooked questions. The answer can only be determined after looking at the question in the context of complete financial and divorce planning. It’s important to determine what it will cost to maintain the home, including maintenance, repairs, taxes and inflation. The next step is to analyze if there is enough money coming in to stay comfortable in the home. Once that has been determined, the advisability of retaining the home must be compared to the advisability of giving up other assets (such as liquid accounts, retirement plans, etc.). Finally, all decisions need to be weighed against current economic and market conditions. ARMA Financial Services will be able to help you answer this question before you commit to a settlement that cannot be changed.
16 Question.
Answer. Arizona is an equitable distribution state. This means the settlements are meant to be fair, however, not necessarily 50/50. Settlements may be comprised of asset distribution, maintenance, child support, and debt assignment. All of these components may be divided in a way that seems to be best suited to both spouses, but perhaps not equally. ARMA Financial Services will assist you in obtaining the most optimal settlement.
17 Question.
Answer. Not all assets are created equal and some assets may have more of a beneficial effect on your financial future than others. Assets such as businesses, retirement accounts and investment accounts may continue to grow. Other assets may require money for their upkeep, such as a home and automobiles, and those costs must be considered in the overall settlement.
18 Question.
Answer. By reviewing all of your financial statements, ARMA Financial Services can help in identifying all of the assets from the marriage.
19 Question.
Answer. The average divorce in the United States takes over a year to finalize. In the beginning, both parties spend a great deal of time trying to get a clear understanding of the financial and legal issues involved. An attorney is an expert in at interpreting family law, ARMA Financial Services is an expert in dealing with the financial matters of divorce. You may reach a settlement sooner by working with a ARMA Financial Services early in the divorce process because a ARMA Financial Services will explain the financial aspects of the pending decisions and help you make educated, not emotional decisions.
20 Question.
Answer. Some assets are easy to value, like checking and savings accounts, while others are more difficult and require professional assistance. ARMA Financial Services will help value all assets such as: pensions, executive compensation plans, stock options, rental properties, brokerage accounts, IRAs, etc.
21 Question.
Answer. Yes, you need an attorney who specializes in family law. An attorney will prepare your legal separation agreement and assist you in obtaining the actual divorce. An attorney advocates for your legal interests. A financial specialist works with your attorney to help assess all of the financial issues.
22 Question.
Answer. Primarily we work with only one party. We do this to avoid conflicts of interest and to be able to devote ourselves to obtaining optimal solutions for our clients.
23 Question.
Answer. No, you will need an attorney to advise you on these matters.
24 Question.
Answer. No, mediation is a separate and very different process. We work as an advocate for our client. We will represent your best interests and assist you in making good financial decisions.
25 Question.
Answer. Most of the time, yes. Pension plans that pay out benefits in the future can be evaluated in today’s dollar, and if they are determined to be a marital asset, they are considered to be a valuable asset. We do pension evaluations when they are needed.
26 Question.
Answer. ARMA Financial Services will provide you with a checklist of all of the documents and information required to begin the process. Please see the additional documents page for downloadable forms and a checklist.
27 Question.
Answer. Not at all. If you have a proposal on the table, ARMA Financial Services can analyze the proposal; you and your attorney will then be able to determine whether or not the proposal is acceptable to you. If not, or if you don’t have any proposals, our experienced divorce team will, based on the information you and your attorney provide, create initial or alternative proposals. Our role is to assist your attorney and you; we consider ourselves a valuable component of your divorce team.
28 Question.
Answer. Call or email to set up your initial complementary consultation. Our office is located at:
ARMA Financial Services, Inc
8585 E Hartford Drive
Suite 118
Scottsdale, AZ 85255
480-505-4085
www.armafinancial.com
JPH@armafinancial.com
29 Question.
Answer. Pensions and retirement plans may be marital assets. Depending on the state you live in, the portion that was earned before your marriage could also be considered a marital asset. However, it is possible to keep your pension and have it offset with other assets. Through the analysis of your particular situation, we will be able to determine how and if any pension division will affect your financial future and what can be done to maximize your potential benefit.
30 Question.
Answer. Everything acquired during the marriage, no matter whose name it’s in, is typically considered marital property. If you are going through a divorce, it is important to evaluate the financial drawbacks to having your IRA included in the list of marital assets you retain, post divorce. IRAs, as well as other qualified assets, receive different tax treatment than other types of assets. It is important to consider the tax consequences of all potential assets before making the decision of how to divide the asset.
31 Question.
Answer. Every state has child support guidelines that are mandated by the state. However, the guidelines get tricky when one (or both) spouse is an independent business owner who can control their wages. In this situation, it typically helps to bring in a financial or tax expert who can help determine the true potential income of the individuals.
32 Question.
Answer. Only if you can’t reach an agreement. Then, a court date is set and a judge hears the case. Less than 2% of all divorce cases go to trial in the United States.
33 Question.
Answer. A QDRO or (Qualified Domestic Relations Order) is the legal document that divides up a qualified pension or retirement account (including 401(k)s) pursuant to a divorce. The Judgment of Divorce is not sufficient to divide up qualified plans, a QDRO is needed. There are many nuances that go into QDROs and make it an advocating (versus neutral) document. In order to protect your assets, be sure to obtain qualified advice in this area from a specialist. Your divorce attorney should be able to provide you with proper guidance.
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