A financial advisor for divorce, often called a divorce financial planner, works out what a settlement is really worth before you sign it: after taxes, over years, and against what you’ll need to live on. Your attorney handles the law; the planner handles the numbers. Fee-only planners who publish prices charge a median $300 an hour or $2,000 for a one-time plan, and divorce work is often billed one of those two ways.
Specialists are rare. In our study of fee-only firm websites, about 6% named divorce planning, against 63% that named retirement planning. Expect to look beyond your own town.
Why an equal split isn’t always equal
Two assets with the same balance can be worth very different amounts. A divorce planner’s main job is to show you that before the split is final.
| Asset, each worth $200,000 on paper | What it’s really worth to you |
|---|---|
| Cash in a savings account | $200,000, available now |
| A traditional 401(k) or IRA | Less: every dollar is taxed as income when you take it out |
| A Roth IRA | Close to $200,000, usually tax-free in retirement |
| Stock bought years ago | Less after capital gains tax if you sell |
| Equity in the house | Less after selling costs, and it doesn’t pay the mortgage |
Taking the house and giving up the retirement account can feel safe and turn out short of cash. Taking the 401(k) can look generous and leave you with a large tax bill later. A planner models each version so you can compare them side by side.
The rules that shape a settlement
These come up in most divorces with savings. A planner should explain each one for your accounts.
- Workplace retirement plans are split with a court order. A qualified domestic relations order (QDRO) divides a 401(k) or pension. Money paid from the plan to the former spouse under a QDRO avoids the IRS’s 10% early withdrawal penalty, even before 59½. That exception doesn’t apply to IRAs.
- IRAs move by transfer, tax-free. When an IRA is transferred to a spouse or former spouse under a divorce decree, the IRS treats it as a tax-free transfer, and it becomes the receiving spouse’s own IRA.
- Alimony isn’t deductible or taxable. For divorce or separation agreements made after 2018, the person paying alimony can’t deduct it and the person receiving it doesn’t count it as income. That changes what a given payment is worth to each side compared with older agreements.
- Social Security can still count. If the marriage lasted at least 10 years, you’re 62 or older and you’re unmarried, you may be able to collect benefits on your former spouse’s record. It doesn’t reduce theirs.
What a divorce planner does at each stage
Before you negotiate. Gathers every account, debt and income source into one picture. Builds a budget for life after the divorce, which is often the first time anyone has written it down.
While you negotiate. Models each settlement offer over 10 or 20 years: what you’d have, what you’d owe in tax, whether you could stay in the house. Works alongside your attorney or mediator and answers their financial questions.
After it’s final. Updates beneficiaries, retitles accounts, rebuilds a retirement plan for one household instead of two, and helps you invest a settlement you may be managing on your own for the first time.
Why fee-only matters more in a divorce
A divorce often puts a large sum in one person’s hands at a hard moment. That’s when a commission-paid advisor may suggest an annuity or an insurance product. A fee-only planner is paid only by you, so their advice on what to keep, sell or buy isn’t tied to a sale.
The CDFA designation (Certified Divorce Financial Analyst, from the Institute for Divorce Financial Analysts) shows training in the financial side of divorce. It says nothing about how the person is paid. Check that on the SEC’s adviser search; our guide to telling whether an advisor is fee-only shows where to look.
What it costs
| How you pay | Typical cost (US median) | Suits |
|---|---|---|
| Hourly | $300 an hour | Reviewing one offer, or a few questions during mediation |
| One-time plan | $2,000 | Modeling the settlement and a post-divorce plan |
| Ongoing planning fee | $4,500 a year | Help through the process and the years after |
These are prices fee-only firms publish on their own sites, from the Wellspent fee report. A divorce with a business, stock options or a pension to value takes more hours. Ask for an estimate in writing before you start. See what an hourly planner costs for what counts as billable time.
How to find one
- Browse fee-only divorce financial planners in the public graph, or the divorce financial planning specialty page.
- The Institute for Divorce Financial Analysts has a Find a CDFA search. Check each name’s pay on the SEC’s adviser search.
- Ask your family-law attorney or mediator who they work with.
State law shapes a divorce, so it helps if the planner has worked on cases in your state. Many work by video; our guide to virtual advisors explains how to check where they can work.
Questions to ask a divorce financial planner
- How many divorce cases have you worked on in the past year, and in my state?
- Will you model each settlement option over time, after taxes?
- Do you work with my attorney or mediator directly?
- How do you charge for this, and what’s your estimate for my case?
- Will you also help after the divorce is final?
- Do you or your firm earn anything other than what I pay you?
A good planner answers the first with a number and the last with no. For more on judging the answers, see questions to ask a financial advisor.