CDFA cheat sheet

CDFA (Certified Divorce Financial Analyst) is administered by the Institute for Divorce Financial Analysts (IDFA); the exam is a proctored, multiple-choice assessment covering divorce financial planning knowledge.

The CDFA role is financial analysis and education within divorce: gathering and organizing financial data, modeling settlement scenarios, and reporting findings to the client and retaining attorney - not giving legal advice or representing the client in court.

Core subject areas tested: family law fundamentals, marital property law (equitable distribution vs. community property), tax law as applied to divorce, retirement and pension division, asset valuation, and cash-flow/needs analysis.

Marital property vs. separate property: property acquired during the marriage is generally marital; property owned before marriage, acquired by gift or inheritance, and certain personal-injury awards generally remain separate. Commingling can convert separate to marital.

Equitable distribution (most states) is not automatically 50/50; courts weigh factors such as marriage length, earning capacity, contributions, and health. Community property states (e.g., CA, TX, AZ, WA, NV, ID, LA, NM, WI) presumptively divide marital property equally.

Divorce financial analysis deliverables: marital balance sheet, income and expense statement, settlement scenario comparisons (present value of each option), and a budget for post-divorce life.

Professional standards: maintain objectivity, disclose conflicts, document assumptions and data sources, and keep client confidentiality; the analyst supports but does not replace the attorney, CPA, or appraiser.

Exam-taking rule: when a question involves tax or legal treatment, apply current federal rules as stated in the question stem; do not assume state-specific rules unless the stem specifies the state.

Alimony (spousal support): under the Tax Cuts and Jobs Act, for divorce or separation instruments executed after Dec 31, 2018, alimony is not deductible by the payer and not includible in the recipient's income. Pre-2019 instruments retain prior treatment unless modified to adopt the new rule.

Child support is never deductible by the payer and never taxable to the recipient.

Qualified Domestic Relations Order (QDRO): a court order that creates an alternate payee's right to a portion of a retirement plan; it must satisfy ERISA and plan-specific requirements to be qualified.

QDRO timing: the order must be submitted to and approved by the plan administrator; distributions to the alternate payee avoid the 10% early-withdrawal penalty if the QDRO so provides, and the alternate payee may roll the amount into their own IRA.

IRAs are divided by a transfer incident to divorce (per divorce decree or court order), not a QDRO; the transfer is tax-free if done correctly.

Defined benefit pensions: value using present value of the accrued benefit, often via a QDRO with a shared-interest or separate-interest approach; coverture fraction allocates the marital portion of the benefit.

Filing status: married filing jointly generally unavailable after the divorce is final; head of household requires an unmarried or considered-unmarried taxpayer supporting a qualifying person. Dependency exemptions were suspended for tax years 2018-2025, but the child tax credit allocation is typically negotiated.

Capital gains: transferring property between spouses or incident to divorce is generally non-recognition under IRC §1041; the recipient takes the transferor's basis and bears the future gain.

Marital balance sheet categorizes assets as marital or separate, and as liquid vs. illiquid; valuation date matters and varies by state (date of separation, filing, or trial).

Business valuation approaches: income approach (capitalization of earnings, discounted cash flow), market approach (comparable sales), and asset-based approach (adjusted net asset value).

Goodwill: enterprise goodwill (attributable to the business) is generally divisible; personal goodwill (tied to the individual's reputation/skills) is often treated as separate property in many jurisdictions.

Real property: determine fair market value via appraisal, subtract mortgage balance, and account for refinancing costs and capital gains basis when dividing.

Retirement assets: compare after-tax present values, not gross balances; a $100,000 pre-tax 401(k) is worth less than $100,000 in a Roth IRA or taxable brokerage account.

Hidden or undervalued assets: review tax returns, bank statements, loan applications, and business records; lifestyle analysis can reveal unreported income.

Debt division: allocate responsibility for mortgages, credit cards, and loans; note that creditors are not bound by the divorce decree, so indemnification clauses matter.

Present value comparison of settlement scenarios is the core CDFA modeling tool: discount future cash flows (support, pension payments, deferred property) to a common date for apples-to-apples comparison.

Income and expense analysis: build a detailed monthly budget from bank and credit card statements; separate fixed vs. variable and needs vs. wants for post-divorce planning.

Support guidelines: most states use an income-shares or percentage-of-income formula for child support; inputs include both parents' incomes, custody time, number of children, and add-ons (health insurance, childcare).

Spousal support factors commonly considered: marriage duration, standard of living, earning capacity, age and health of each party, and contributions to the marriage (including homemaker contributions).

Imputed income: courts may assign earning capacity rather than actual income when a party is voluntarily unemployed or underemployed.

Self-employment income: use net business income after ordinary and necessary expenses, and watch for add-backs (depreciation, personal expenses run through the business).

Lifestyle analysis: reconstruct actual spending from records to test reported income and to establish the marital standard of living for support purposes.

Cash-flow modeling: compare each settlement option's effect on both parties' post-divorce budgets; identify shortfalls and the need for retraining, refinancing, or asset liquidation.

Tax effect on support: since post-2018 alimony is not deductible/includible, model support as after-tax cash flow for both parties.

Divorce grounds: no-fault (irreconcilable differences) is available in every state; fault grounds still exist in some states and can affect property division or support in limited cases.

Key stages: petition/filing, temporary orders (pendente lite support and restraining orders), discovery, mediation or settlement, trial, and final decree.

Discovery tools: interrogatories, requests for production, depositions, subpoenas, and requests for admission; financial affidavits are commonly required.

Legal custody (decision-making) vs. physical custody (residence/time-sharing); parenting plans define schedules and are separate from financial issues.

Prenuptial and postnuptial agreements: enforceability requires voluntariness, full financial disclosure, and no unconscionability; they can override default property and support rules.

Mediation vs. collaborative divorce vs. litigation: mediation is non-binding until agreement is signed; collaborative law uses a participation agreement disqualifying attorneys if the process fails.

Jurisdiction: residency requirements vary by state; the Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA) governs custody jurisdiction, and the home state is generally where the child lived for the prior six months.

The CDFA's role in the process: provide financial analysis, prepare settlement scenarios, testify as an expert if qualified, and support the attorney's case strategy without giving legal advice.

Objectivity: the analyst's conclusions must be based on verifiable data and stated assumptions, not advocacy for a predetermined outcome.

Conflict of interest: decline or disclose engagements where the analyst has a relationship with either party or a financial interest in the outcome.

Confidentiality: client financial data is privileged in many contexts; share information only with the client, their attorney, and authorized parties.

Documentation: maintain working papers for balance sheets, budgets, and scenario models, including data sources, dates, and assumptions.

Scope of practice: do not provide legal advice, draft legal documents, or render tax opinions beyond the analyst's competence; refer to attorneys and CPAs.

Expert witness vs. consulting expert: a testifying expert's work product may be discoverable, while a consulting expert's may be protected; clarify the role with the attorney.

Fee structures: hourly, flat-fee, or retainer; disclose fees and billing practices in an engagement letter before work begins.

Continuing education and credential maintenance: CDFA holders must meet IDFA renewal requirements, including continuing education credits and adherence to the code of ethics.

Health insurance: the dependent spouse may obtain coverage through COBRA after divorce, but the employer may terminate coverage upon divorce; marketplace or employer coverage alternatives must be modeled.

Life insurance: maintain coverage to secure support obligations, with the obligor as insured and the obligee as beneficiary; ownership and premium responsibility should be specified in the decree.

Disability insurance: protects income that supports alimony and child support; review coverage and beneficiary designations.

Credit: joint accounts remain the responsibility of both parties to creditors despite the decree; close or refinance joint accounts and obtain a credit report to identify joint debt.

Beneficiary designations: update retirement accounts, life insurance, and wills after divorce; a decree may require a specific designation.

Social Security: a divorced spouse may claim benefits on an ex-spouse's record if married at least 10 years, is unmarried, and meets age requirements; this does not reduce the ex-spouse's benefit.

Emergency fund and debt management: post-divorce planning should establish a reserve and a plan to pay off marital debt allocated in the settlement.

Housing: model the cost of refinancing or buying out the other spouse's share vs. selling and splitting proceeds, including transaction costs and capital gains.

Present value: PV = FV / (1 + r)^n, where r is the discount rate and n is the number of periods; used to compare deferred settlement payments.

Future value of an annuity: FV = PMT × [((1 + r)^n − 1) / r]; present value of an annuity: PV = PMT × [(1 − (1 + r)^−n) / r].

Coverture fraction for pensions: marital months of service ÷ total months of service at retirement, multiplied by the benefit to get the marital share.

Net present value comparison: subtract each scenario's present value of costs from present value of benefits to rank settlement options.

Income shares child support formula: each parent's share of combined income × total support obligation = that parent's share; adjust for parenting time.

After-tax equivalent: taxable amount × (1 − tax rate) = after-tax value; use to compare pre-tax retirement accounts with Roth or taxable assets.

Capitalization of earnings: value = normalized earnings ÷ capitalization rate; the cap rate reflects risk and growth.

Budget ratio check: post-divorce expenses ÷ post-divorce income; a ratio above 1 signals a shortfall requiring support, asset liquidation, or expense reduction.