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Divorce and Your Money - #1 Divorce Podcast

Visit us at https://divorceandyourmoney.com. Join Shawn Leamon, MBA and Certified Divorce Financial Analyst as he breaks down divorce with practical advice to protect your financial interests. With more than 500,000 listeners and 200 episodes, Divorce and Your Money is the podcast #1 divorce podcast in the nation. Get your questions answered, checklist your way to financial freedom, and safeguard your new future with an expert’s help… because you and your family are worth it.
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Jul 19, 2021

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

 

A question that's been coming up quite a bit is what day or what month do I use to value all of my stuff? What day do I pick to value the house, value the retirement account, use what numbers in the bank account? Is it June of this year? Is it April of last year? Is it when I filed for divorce? And or is it when the trial date is coming up? What day do I use to pick to value all of our stuff? And it's a really important question and a really complicated question because the date that you value all of your stuff can have really important impacts. I'll give you just a few examples so you know what I'm talking about. Let's just say you separated two years ago, and now you're finally getting to the divorce negotiation, which is a very common situation.



Well, two years ago, your house may have been worth $500,000, but let's say now your house is worth $700,000. And you're planning on keeping the house. Do you use the $500,000 valuation from two years ago, or do you use the $700,000 valuation? Or a more complicated subject that I've been dealing with a lot lately is people who have stock options. This one's a very tricky one, but if you have stock options, those options often have certain grant dates where you get more options or certain exercises dates where those options get a lot more liquid or have more value. And so, one of the things that gets complicated is, well, when you're trying to get divorced or you or your spouse has stock options, not only what date do you use to value those options? Because generally speaking, oftentimes those options can fluctuate substantially in value over time, but also how many options are actual marital property versus not?



And trying to figure that out can be very important. And the reason I bring up this subject is it is something that you should be thinking of. And then the third example that actually happens is a very simple one that actually doesn't have a lot of complications, but something you should be thinking about, which is, let's just say, I was talking to someone this morning about this. Let's just say you and your spouse are going to negotiate things yourselves, and it's relatively amicable, all things considered. And you're trying to figure out, well, what day do we use to pick for the bank accounts? Do we use last month? Do we use three months ago, whatever it is? And we just want to make sure that we're all on the same page and that could be a simple situation, but the point is, is that all of your property fluctuates.



Oh, and then one more, sorry, I said that one more example, but if you think about a retirement account or a stock brokerage account or an investment account. Investments in your account fluctuate every day. And so if you were to calculate your investments on April 5th, that same investment account will have a totally different value on April 6th. And it could have a very different value in July of the next year. So there are a lot of things to think about when it comes to what date you pick to value assets. And I just want to give you some things to think about. And the important thing about this episode is to know what date to pick and to be thinking about what date to use. And it may give you some thoughts in terms of what timing you should pursue when it comes to your divorce process.



And another way to think about the date that you value the assets is your separation date. And the goal in your divorce is to have a date where all of your assets, all of your debts are valued as of that date. So there is no confusion. So things go up in the future, that's not something that gets discussed. If things go down in the future, that's not something that really gets discussed either. The goal is to have it consistent going forward. Now, what is extra complicated about this topic is two things. One is that every state has very different laws as to how the separation date or the date that you value assets gets calculated. On top of that, it can change within the divorce process and depending on your state's rules.



And so you need to really understand and talk with an attorney about the ways that your assets may be valued and sometimes revalued. And I'll give you some examples of what the options might be. So in some states, you use the date that you separated. Now, what does separation mean? For some people, it's very clear. The data separation could be the date that one spouse moves out of the house, or I talk to plenty of people where one spouse lives upstairs. The other spouse lives in the basement. And you could use that as the date of separation, but oftentimes you are still living under the same roof, pretty much in the same space. And it's hard to determine what that date of separation is. And sometimes it can be a big fight. And when I say fight, I'll say negotiation about what the date of separation is because whatever date you pick could have a very big impact on how much money each spouse ends up with at the end of the day.



So the date of separation is one option. A second option that comes up all the time is a very clean and easy one to understand, which is the date you filed for divorce, right? So the day you file, that can oftentimes end up being the date that you use to value all of your houses, your bank accounts, your credit card debt, your retirement accounts, et cetera, would be on that date you file for divorce. A third option that can come up as well, is the date, or sometime right before a trial. So oftentimes if you have, or sometimes if you have a trial date set, your state may say, and as I said, all of this is very state-dependent. So you need to figure out the rules in your state, but your state may say that, okay, well, we have a trial coming up in nine months. I'm just going to say the trial for sake of example is going to be in December. So they might say we're going to value everything as of October and use that as the value of all the assets.



And if you're coming up on a trial date, you may have been in this process for a year, two, three years or longer to get to that date. And therefore, that's why they decide to do everything closer to the actual trial date because they know that things have fluctuated quite a bit. And then finally, the last option is oftentimes, or sometimes you can decide upon a date that you want. So if you and your spouse agree that this is the date that we're going to use for separation to value all of our assets, then that's the date that you pick.



And it could be as simple as that, but both of you have to agree. And it's not always super simple to get both of you to agree. So there are lots of options there. Could be the date of separation, could be the date you file for divorce, could be a date right before a trial, or could be a date that you and your spouse agree upon. But an important point to know is the date that you separated, the date that you value all of your assets can have a huge impact on your divorce and how much money each person gets. And one of the places that comes up a lot of times in the coaching discussions and divorce strategy discussions is what date should we be pushing for? And why?



Because if you have stock options that grant in three months, well, maybe you should file for divorce now to protect those options that you get granted to you in three months, right? Because they wouldn't be included in the marital pile. Or maybe the question is, well, we should push for a date later down the line because there are benefits to waiting in your particular situation. It really just depends. And it depends on your situation, depends on your state, but it's a topic for discussion that can oftentimes get overlooked by one party. And I want to make sure that you are aware of it and thinking of it when it comes to determining well, how much is all of this stuff really worth?

May 19, 2021

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

It's been a few months since I recorded a new episode and not because I haven't been working, but because been working a little too much and got behind on the podcast episode. So apologies for that. Thank you to all 0f the people who I've been speaking to over the past several weeks and months, there've been lots and lots of good questions and, and coaching calls coming in. And I want to get back in helping educate you on the different intricacies of the divorce process. And this episode specifically, I want to talk about some subjects that have been coming up quite a bit.

 

And the first one I'd like to talk about is how do you keep your separate property separate? And also, how do you know if a separate property or what's being called separate property is actually marital property. And if you've been listening to other episodes, you know what I'm talking about in the context, but the big issue is, let's say you had some money.

 

When I say property, it could be something like money. It could be a physical property. It could be, a retirement account, a car, whatever. Let's say you had something before you got married. How do you make sure that if you're now, unfortunately, facing divorce, that is still considered separate property? What kind of things can you do? Or should you be doing? And conversely, if your ex-spouse, for instance, is saying, well, this is separate property, but, but you think it's actually something that you should be splitting between the two of you. How do you broach and go down that discussion? It's a very common topic that comes up every, every few days in terms of people that I get to speak with. And there are a few things to consider here.

 

And let's take it from the perspective of you have some separate property. Maybe you got an inheritance as a, maybe you had something when you got married, there's a lot of different types of separate property. How do you make sure that it stays separate? A few things.

 

The first is to keep good records. Now keeping good records, doesn't ensure that something is separate, stay separate. However, keeping good records can ensure that you can at least be able to prove the argument one way or another in terms of what is going on. So you need to make sure that you can keep good records. Now it becomes a challenge when sometimes you've been married for, someone called me, I spoke to just the other day, who'd been married for 31 years and there was a separate property question and there's no way to get the records. And so we were talking about some advanced strategies in terms of, getting affidavits from a parent who's still around and, and other siblings who are on the receiving end of this inheritance when everyone got the same amount, et cetera, et cetera. In lieu of being able to have actual records, they had to approach a different direction.

 

But if you have things like bank accounts or old account's statements, some of these institutions keep account statements for, for a decade or more, or if you walk straight into your bank, sometimes they can pull if you've used the same bank for a long time and they're still around. Oftentimes they have good records that go back further than what you may build, ask or access online, or just to get when you stroll in, if you just talk to a casual person at the bank. But anything you can do to get old records, old communications that indicate when you received some form of property and how much it was at the time it can bolster your case.

 

The second thing is to avoid co-mingling is a term that if you listen to the podcast, you should've heard before. But co-mingling is just the idea that you may mix your separate assets with your marital assets. Simple as that. And what does that mean? Well, let's just say you got an inheritance and then you got an inheritance of $100 and you put 50 of it into your joint checking account. Well, now you have co-mingled that money. And then you spend that $50 on groceries. Well, is that still separate property? And the answer is it gets really tough and you're probably dealing with marital property at that point. And there's not much for you to do. But if you keep that a hundred dollars that you got as an inheritance in its own bank account, and you didn't ever put your spouse's name on it and you didn't touch it, if for, for normal family purposes, then you will have a much better shot at keeping that account separate.

 

Now, of course, you always need to have your records and you need to always keep that account in your name. And if you're adding in some tracking to that account, all of a sudden the math gets messy unless you have those records, but it is something that is doable. And the cleaner you keep that separate property, the easier it'll be to prove that it is separate property in the context of divorce.

 

And conversely, I said I was taking this from the perspective of the person who has separate property. Well, if your spouse is the one who's claiming it's separate property and they don't have these things that present a good case for you to say, well, hold on a second, maybe this isn't separate property, this should probably, or may need to be considered marital property. And so for these different issues or different tips, I'm giving, if you're the person who's on the other side of this, these are the things that you should be thinking about, bringing up to advocate for yourself to make that separate property marital. Particularly if some of these things don't exist.

 

So one is good, keep good records. Two is to avoid co-mingling. The third thing is to keep track of income and dividends from separate property. And now this is a very tricky one, and this is very state-specific. And I always say, when someone calls, I say, this is technical. And when I say this is technical, I mean, each state can be very different in how they interpret this. And so you really need to have a knowledgeable lawyer in terms of understanding what I mean by this point.

 

Keep your income and dividend separate. Well, let's just say you have a bank account with $100 in it and you get 1% interest a year on that account. Well, with that 1% interest, you're earning $1 a year. Well, that $100 that is in, in some states, the $100 is, is almost always going to be separate property. However, that $1 in interest in some states is considered marital property. So if you're earning interest on an account, the $100 is separate, but $1 is marital. And if you think about that over time, where after a year or two, you have a little bit over $102, year three, et cetera, et cetera.

 

Well, if you think about those earnings over time, that can add up to become a substantial amount. I'm just using the context of a simple savings account, but some of you have retirement accounts to pay a lot of dividends and interest, and there's a lot of appreciation in them. And you need to really have a discussion with your attorney as to, well, is it all separate or all marital, or is there some combination of the two? Because sometimes it is sometimes that separate property that you thought you did everything right. Well, that income and dividends may actually be marital property that you have to split. And now all of a sudden the picture certainly shifts for you.

 

So something to really think about and know the laws in your specific state on that one. And, and it gets tricky. And so what you may want to do if you're thinking about, or if you have separate property, I should say using my example of you have $100 in separate property and you get $1 in interest a year. Well, maybe you want to put that $1 in interest always goes to a different account now that different account, might still just have your name on it, that different account you might not touch anyways. However, from an accounting perspective and trying to figure out what's part of the marital pool later down the line, having that separate account is a good way to pursue that and to figure that out.

 

The fourth thing I want to discuss is to consider getting a postnuptial agreement. Now, look, postnuptial agreements are very tough. Now, sometimes you may have a prenup which deals with these things, but if you're listening to this podcast, getting a prenup is a little too late. But if your state allows for postnuptial agreements, that may be a way to keep separate property separate. Now not every state allows for postnuptial agreements, but if your state does, and your spouse is willing to negotiate with you on it, then that is something to consider that can make the math. And at least simplify part of, this part of the divorce discussion later down the line. Now postnuptial agreements can happen in a few different circumstances that I see most commonly. It's hard to be married for eight years. And then in year nine, you say, I want a postnup. That's, that's a tricky proposition. I mean, if you can do it then great, but that's normally not the situation in which I see postnuptial agreements.

 

In one of the situations, I see postnuptial agreements a lot is right at the time of separation. So, if, if there's something going on, for example, I'll give you an example of something that happened recently as a business owner separating from their spouse. The only thing the business owner wanted is that if that business owner does some sort of deal with the business after the time of the separation, that the spouse isn't entitled to that now. The spouse still gets any portion of the business before they separated in their value, their fair share. But in this case, this business person wanted to, keep things separate and, and that's going to enable this person to, to run their business as they see fit for as long as they're separated. I mean, it's, it's a question of they're, they're still trying to work things out so they may get back together. They may get divorced. They don't know. But as long as they're living separately, they got a postnup.

 

Or, another time I see postnups is, is after a new marriage when you're older. I mean, there's a window of time where it's acceptable to ask for a postnup, but there are, if you are in a position where a postnup makes sense, and you may be able to ask for it, a consultant attorney, and it's a good time to think and helps can help keep separate property separate.

 

So those are just some things to think about in terms of keeping separate property separate. Or as I said, if you're the person and your spouse are arguing, well, this is separate property and they can't provide some base level information or provide the details on some of these things. Then it may not totally be separate. It may actually be marital property that you're, you're entitled to a sheriff.

 

Now, the last thing I want to mention on this point, that's, that's very relevant is that sometimes things aren't clear and there are shades of gray. And so oftentimes separate property is not 100% separate and there is a marital component to it. I'll give you a very common example. Let's just say you had a house before you got married and that house you, you, you bought before you got married. And then, a few years later, you get married. Your spouse moves into that house. You have your kids, blah, blah, blah, blah, blah. Now let's say that you decide to renovate the house or put an addition on the house you put in a new deck or a new roof, or a new, a new floor or, another add-on, addition to the house, whatever the case may be.

 

And that addition to the house substantially improves the home's value. Well, under that case, oftentimes maybe I'm just making up these numbers, but 70% of the house might be separate property, but the 30% of the house value may be meritable property because of some of those additions you made to it in some co-mingling and gray areas. It is a very tough and confusing and complicated area of family law that applies all the time. And so, the goal I always talk about with people is, all right, well, let's figure out all the ways we can argue that this is going to be separate property, or if it's your spouse, all the ways we can argue this should actually be meritable marital property. And let's just make the best case for you. Because oftentimes, it's not going to be 100% in one person's bucket or 100% in the other person's bucket. And there are a lot of shades of gray when it comes to separate property and keeping separate property separate and, and marital property.

 

So those are the four things just to think about and keep on the top of your list is the top of your mind, as you're thinking about separate and marital property and the best ways to keep it separate or prove that it's not separate. First is having good records. The second is to avoid co-mingling. The third is keep track of the income and dividends. And finally is a postnuptial agreement if that is available, or if you had one in place.




Feb 16, 2021

0227 - Infidelity, Divorce, and How to Prepare - Interview with Dr. Marie Murphy, Relationship Coach

In this episode, we have an interview with Dr. Marie Murphy, Relationship Coach, and Host of Your Secret is Safe With Me podcast, a non-judgmental talk about infidelity. Learn more aboutMarien here: https://www.mariemurphyphd.com/about.  

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

Dr. Marie Murphy: Hi, everyone. I'm Dr. Marie Murphy. This podcast is all about expanding the conversation around infidelity. I'm a relationship coach and I specialize in helping people who are having affairs make decisions about how to move forward that are truly right for them. On this show, we feature tools and guidance from my coaching practice, as well as advice from other professionals whose work pertains to the sometimes complicated business of romantic relationships.

Today, I have the pleasure of talking with Shawn Leamon, host of the Divorce and Your Money podcast. Shawn received his Bachelor's degree in economics and philosophy from Dartmouth College and his M.B.A. from the I.E. Business School in Madrid, Spain. Shawn is a certified divorce financial analyst and provides financial advice for people who are divorced podcast and his work with one-on-one clients. You can learn more about Shawn's services at DivorceAndYourMoney.com.

In his personal life, Shawn loves to push his physical and mental limits as an ultra-endurance athlete, and as an avid traveler, Shawn spends his time between his offices in Dallas, New York City, and Hanover, New Hampshire. He can often be found wandering the globe, and of the more than 20 countries he has visited, Brazil and Monaco are two of his favorites.

Before we get to today's episode, I want to let you that today's show is brought to you by Marie Murphy, Ph.D. Relationship Coaching. That's me. I provide shame-free, blame-free, non-judgmental relationship coaching. You can talk to me about the things that seem too messy or weird or stigmatized to share with your best friend or your spouse, or even your therapist, including but not limited to matters related to infidelity. To learn more about my work, go to MarieMurphyPhD.com.

Now, today's episode. Shawn, welcome, it's great to have you here!

Shawn Leamon: Hi, Marie! Thank you for having me.

Dr. Marie Murphy: It's a pleasure. You have an awesome book that is called Divorce and Your Money, if I'm not mistaken.

Shawn Leamon: That's right.

Dr. Marie Murphy: Right? Yeah, okay, great. I recommend this book to anyone who is staring down the barrel of divorce. It is clear and packed with hopeful guidance, and one of the things that's really interesting that you talk about is the value, and often the necessity, of having a really good divorce lawyer, but you also talk about the limits of what attorneys provide clients who are going through divorces. I think you quoted an attorney that you know as saying, "We attorneys went to law school so we wouldn't have to do math," and I can certainly relate to that, even though I'm not an attorney.

Can you say more about the limits of what attorneys provide, and why it's important to have a financial advisor, as well?

Shawn Leamon: Most certainly. I think at a high level, there's three major issues that go on in divorce. One is, of course, the emotional side: the relationship, your own emotions, emotions of your spouse, kids, et cetera. Of course, you should have help with that aspect.

The other element is divorce is, by nature, a legal transaction. Marriage is a piece of paper. Divorce, conversely, is another piece of paper that says that you're divorced. There are a lot of legalities to how to split up a couple and all that entails, and that's where having a good lawyer will help you.

Then on the other side of it is the third part of the financial element, which is all of your money. You're talking about houses, retirement accounts, how much support someone may pay or receive; what you're going to work later in life; are you going to move? How are you going to provide for the kids long-term? Is there a college fund or a retirement that may be derailed because of this process?

So, there are always many, many, many financial considerations in the divorce process, and it's very good, both during the divorce process, but also after the process, to work with a financial advisor because the things that your attorney is going to be negotiating for you, or at least many of the things the attorney is going to be negotiating for you, are going to affect you for a long period of time, perhaps many decades. So, getting those key financial pieces right and knowing what you should be thinking about during the process is very important so that you have a good financial future afterwards.

Dr. Marie Murphy: Yeah, cool.

Now, one of the things that I hear from clients fairly often, which you may hear as well, is their fears around divorce. Often, I hear people telling me, well, this isn't the right time for me to get divorced, and when I hear that, it's often because someone is saying that they really just don't want to deal with the discomfort and disruption that will probably inevitably come if they decide to go through with the divorce. What I always tell people is, look, you have a choice. You never have to get divorced. Even if you're unhappy in your relationship, even if you want to leave your marriage, you still don't have to do anything about that.

I work with people on the emotional side of these kinds of challenges, which is critical, but often what I find is that folks who are in this position of really resisting the idea of divorce or fearing the idea of divorce, even though they want to leave a marriage, is that they don't really know what all goes into the practical concerns, and so they're intimidated by what they don't know about the practical elements of the process.

One of the things that I found really interesting in your book is that you talk about why it might be a good time versus a less good time to get divorced. What are some of the financial reasons that make a better or worse time to go through a divorce, or initiate a divorce, I guess?

Shawn Leamon: It's one of the hardest questions and issues to deal with, is when to start this process. There is a lot that goes into ending a relationship. You mentioned some people might not know what's there or be ready to deal with some of the complications and hassles and everything else that is associated with it, and even if you don't know quite whether or not you're ready, or at least you're in the throes of things, one of the things that's very common with me, and with an attorney, as well, is doing your research and starting to figure out, all right, well, here's how this process may look. Here are some of the big questions I may be thinking about and starting to get some preliminary answers.

I'll give a financial version of that, which also gets to my broader question and some of the broader financial things. I always ask someone, "What do you want?" Let's assume... what do you want your future to look like? If you're in your 50s, for instance, you're probably going to live another 30 or 40 years. That's a long amount of time. Do you want to stay in the relationship as is? Do you want to make modifications to it? I'm not going to make any judgments because that decision is very personal and there is a lot of intricacies to that, but what is it that we're aiming for in how you want the rest of your life to play out? If you're even younger than that, if you're in your 30s or 40s, there's a lot of life left to live, regardless of your age.

So, the question in terms of financial things to be thinking about... well, there's a lot of considerations, one of which is there's two people who are part of this relationship, and so, if one person wants one thing... and I'm speaking from a financial perspective, as well, when I answer this... if one person wants one thing and you want something else, how are you going to figure that out? Sometimes divorce is the only option in that scenario, but there are sometimes alternatives.

The other thing is, hey, some states... and this is where I also say do your homework and start thinking about it... some states have some very potentially severe... I don't want to call them penalties, because that's not quite the right word... but there are milestones in a marriage that can affect how assets are split, how much money gets paid, how long money gets paid, what happens with kids. If we're thinking about... if you have kids who are, generally speaking, under 18, though that varies depending upon your state, there's a child support consideration, versus kids who are off in college where you don't really have to discuss that as much as part of the divorce process. If you want to move states... I mean, there's so many different things to start thinking about when it comes to that when decision, but you really have to... and I encourage everyone... is just do the homework.

A lot of times, if you do a lot of research upfront... and I talk to people who may not be getting divorced for five years, but because... maybe they want to stay together and stick around for the kids until the kids are out of the house. But they may be thinking, well, hey, if we get to that 20 year mark in our marriage and we're in a state where that 20 year mark could mean the difference between temporary alimony or spousal support and permanent spousal support, that becomes a really big deal in terms of doing things sooner or delaying things, depending on if you're receiving or paying.

There's a lot to think about when it comes to that decision from a variety of things.

Dr. Marie Murphy: Yeah, for sure.

What do you say to people who come to you who really want to be done with their marriage and done with their spouse, but their circumstances are such that it might not really be an ideal time to go through the bureaucratic process of divorce?

Shawn Leamon: There are options. One of the things that's important is having a clear agreement as to when things are supposed to be split, because one of the important financial considerations is, when do you stop the clock in terms of assets and valuing assets? What I mean by that is, if you have... a common example is, let's say you're contributing $1,000 a month to a retirement account. We'll try and keep math very simple, particularly in a verbal conversation.

Let's just say you're contributing $1,000 a month to a retirement account, and you're married. Well, 500 of that 1,000 is going to probably be your spouse's property when you split. So, if the clock is perpetually ticking, then you're continually contributing assets to that merit of accrual. But if you come up with a separation date or a separation agreement, and work out some logistics with your spouse, if it's possible... it's not always possible to do so without filing... you may be able to save yourself some funds in that category, and sometimes people do that for years. It's very much a question of when does the clock stop? A lot of times, the clock keeps running, and from a financial perspective, if you're getting a big bonus at the end of the year or the early phase of a new year, or if an asset is about to appreciate, or if you're... I know this is kind of a slight tangent, but if you're getting inheritance or a big gift, inheritance is generally excluded, but making sure that you handle those things properly is very important in that perspective, as well.

Dr. Marie Murphy: Yeah, so what it sounds like you're saying is even though you may have all kinds of emotional reasons for avoiding the divorce process, or delaying, I guess you could say, the divorce process, there may be some very sound pragmatic reasons for being proactive rather than resistant to acting.

Shawn Leamon: Yes, and I'll also give kind of a weird one, but it actually affects a lot of people, which is what people's work schedules are... not work schedules, but actual jobs. If two people are working and have reasonable incomes, that can have a big effect on terms of how much support is paid or received, but if one person has been out of the workforce for a long time, or recently got laid off and prospects aren't good, that can affect how much support gets paid or received be someone. There is a timing element to that, too, or if someone is graduate school and they're about to finish up, and they're going to have the capacity to earn a good amount of money, there's some things to consider, or re-training considerations where if someone... let's just say the kids are finally graduating, and in two years, you're going to go back to school and get a degree, or your spouse is, that could be an important financial decision to keep in mind in terms of when to separate or when not to if we're just talking numbers.

Dr. Marie Murphy: Yeah, interesting.

Okay, let's talk about infidelity. Since a lot of my clients are the one in the marriage who is cheating, there is often some concern about how infidelity will bear upon the divorce. Again, I think the folks that I work with have varying levels of knowledge about what this means in their state and what this means in the nitty gritty details of the division of assets, so tell us what this looks like.

Shawn Leamon: There's good news and some bad news, and it really depends on where you live. That's the other thing to keep in mind for people listening. Every state has different laws. There's general frameworks that are true for most states, but still, there are unique instances in a lot of states.

Now, the good news is all states have no-fault divorce laws, which just means that you can get divorced for any reason, and you don't have to prove anything, and even if someone does prove something, usually it's not a huge effect when we're talking infidelity. I say usually because there are particularly a handful of Southern states, is where you see this most commonly, where there can be some additional impacts if you can prove infidelity, and that can affect the asset split and can affect some other things. Now, it doesn't mean that a split is going to become 100% lopsided or something crazy, but it does affect things on the margin for some places.

Now, on the other side of that, probably 45 out of the 50 states, it has zero impact... almost who cares? There's a very practical reason for that, and the reason is up until 20 years ago, roughly... and of course, this evolved over time over a longer period... but if you had to prove infidelity or disprove infidelity, that was a huge part of the divorce process. Many, many thousands of dollars and hours and time were spent in the '50s, '60s, '70s, and '80s, and to some extent, the '90s, of who did what and trying to prove that, and that adds, on top of everything else that happens in divorce, another layer of complications, so... there was a movement.

Dr. Marie Murphy: That's a lot of legal discovery.

Shawn Leamon: Yeah, so there was a movement that every state was basically like, this is not a productive use of court time, and we're just going to say you can get divorced for whatever purpose rather than having to prove it.

Now, to take it a slightly different direction, here's what can come up can affect you, and it has to do with... the technical term is dissipation of marital assets, and that is if you have a girlfriend or boyfriend, and you are taking marital funds... or in between... but if you are taking marital funds and you are spending them on lavish vacations, gifts, cars, apartments, or a house, or whatever that is, and that's marital money you're spending, and your spouse finds out about it or can prove it, you can end up having to repay that money to your spouse later down the line.

Now, the good and the bad... if I'm being quite frank, this is very hard to prove, and it's very expensive to prove, but I've seen people who have spent hundreds of thousands of dollars on... sometimes it's something as simple as, and I don't mean to use the word simple, but as straightforward as an escort. I've seen people spend tons of money on escorts before, and that comes up, because that's relatively easy to trace when it gets into the hundreds of thousands of dollars. But if it's $10,000 here or a $1,000 there on a business trip, it's complicated. It's doable, but there comes a point, too, in this whole process, with anything in divorce, where it's like, hey, is it really worth getting a forensic accountant... is this worth spending $20,000 on a forensic accountant to find $20,000 in money that may or may not have been spent on an affair?

There's intricacies to it, but it is something to be aware of, that if you are spending a bunch of money on an affair... or another version of it; I know it's a little bit outside the context of your expertise, but if someone is a big gambler, that's another version of dissipation of funds, and that's going to Vegas every weekend and blowing lots of money; same idea as infidelity. You can get penalized for that in part of the divorce process.

Dr. Marie Murphy: Interesting, yeah. That makes sense.

Let's kind of step back from the infidelity thing and talk about the general pragmatic concerns for anybody who thinks they're potentially going to be getting divorced or is definitely about to be getting divorced. Where does one start? Let's say you're pretty sure it's happening. Where do you begin? How do you start to get organized? What are the key things that you need to do first?

Shawn Leamon: There's a few things. The two main things I would do... one is, regardless of how this process goes, get all of your financial documentation together that you have access to. Tax returns, just your home information, your retirement account information, bank accounts... whatever you know of that you have from a financial perspective, get it, because it's going to come up as part of the divorce process, and if you don't necessarily have it, because I work with a ton of people who may not have been involved in the finances, while you're still under the same roof, or somewhat under the same roof, or have access to things, put as many clues together as you can, because that can be very helpful for you further down the line.

The second thing I would do is consult with an attorney. Now, an attorney is going to ask for all the financial information, which is why I say gather that first. You're going to want to make sure that... and there's a lot of discussion about attorneys and what the appropriate attorney is, and who you should pick for your situation... but you should be very aware at a high level of the legal aspects that are going to apply to you and your situation.

It could be child support amounts and duration. It could be how things are going to be split. It could be something as fundamental as, there's actually multiple ways to get divorced and different divorce processes. So, having an attorney guide you through those options so that you can start thinking about them will be very good. It doesn't mean you necessarily have to hire that attorney day one. You may end up consulting with multiple attorneys, but you do need to understand the basics of what you're looking at and going to be dealing with so you can prepare yourself for what's to come, because it's going to be, for most people, a long, a difficult, a challenging process.

The other thing to be considering about all of that is, like to say, divorce is going to be over one day, and you're going be living alone or separately or in a new form, and so, if I were to add a third thing to that, it would be to start formulating what that life looks like in a post-divorce world so you can make the right decisions now to set yourself up for the future.

Dr. Marie Murphy: Yeah, I think that's so important. What is it they say? Begin with the end in mind. Have a vision of the future that you want to experience, even if it probably isn't going to be your reality tomorrow or next week or next month. Start to cultivate the vision of what you want your life to be like going forward. I think that's so important.

Shawn Leamon: Just one little, small, small actually addition to that... sorry to cut you off.

Dr. Marie Murphy: No, no, please.

Shawn Leamon: That is one of the most important things. I talk to people every day across the country about divorce issues. The question I ask pretty much 100% of the time is, "What do you want?" What do you want your life to look like? I can provide some commentary here and there, but ultimately, you're going to be living your life, and we just want to make sure that all parties, be it therapists or emotional, legal, and financial, that we mentioned before, are guiding you in the right direction given what you want.

Dr. Marie Murphy: Yeah, totally. I don't know if you encounter this with your clients, but something that I see fairly often is, people have a pretty good idea of what they don't want. They're pretty well aware of what isn't working for them, but the vision of what they might want instead is often pretty underdeveloped. I see all kinds of reasons for this. People have lived for decades believing that they have to do things in a certain way, or that it's not really okay for them to pursue their own desires, or that it's selfish for them to want things other than what their partner or soon-to-be-ex-spouse thinks they should want, et cetera. Do you see that, too?

Shawn Leamon: Unquestionably, and deciding what you want is not an easy thing and that's beyond my expertise, but what I do tell people, and I have this conversation multiple times a day every day, is I say, "Give me your top three, top three things you want, and give me your bottom three. What are the three things you don't want? Let's just start with that. We can figure out the rest later."

I'm just very quantitative. I can't help you through all of figuring that out, but give me three things that we can work towards and three things we should try and avoid, and we'll go from there.

Dr. Marie Murphy: Yeah, I love it. That's a nice, concrete starting place.

I, of course, am very qualitative. One of the things that I do do with clients is help figure out what they actually want. What would you choose? What would it be like if it were possible for you to believe that it's okay for you to want things, and that you can want whatever you want? That's part of the joy in the work that I do, but quite frankly, for a lot of people, that's hard, and that is where more of the work ends up being than actually the nuts and bolts of getting through a process like divorce where there are specific things that you have to take care of.

It's great. In a sense, it's challenging to change your conceptions of what's possible for you and what's possible in your life. Getting beyond our self-imposed limits can be quite a task, but it's so worth it. I'm sure you see this, too. I'm sure you see people coming out the other end of the divorce process and surviving and thriving in ways they never could have imagined.

Shawn Leamon: Everyone is going to come out of the other end of the divorce process, which is great. That's one of the most encouraging things, is I always joke, but I'm dead serious with people... the day we never speak again is a great day, because you're done with your divorce process and you get to live the rest of your life. But also because of that, you are going to be forced to deal with the nuts and the bolts, and you just have to deal with them.

There is an element of not facing reality, or at least not wanting to, because it's very, very difficult. I'm not saying it's easy, and it may take a lot of time to wrap your head around what's going on, sometimes years. But at a certain point, divorce papers are going to be signed; you're going to be living your independent life. You're going to have to deal with them, so do it sooner over later is just the way that I always put that.

Dr. Marie Murphy: Yeah. Yeah. I love that you emphasize at some point or another, you just have to accept that this is reality, however unexpected or painful or inconvenient it may seem. Yeah.

All right, let's talk about what you mentioned a little while back, about the actual options for the divorce process. What are your options? What are the different ways that you can approach this?

Shawn Leamon: There's a lot of different options in the divorce process, but what it really comes down to... and I'll give you a few examples... but what it really comes down to is how much you and your spouse are willing to work together without added conflict, right? There's no question that you're getting divorced for a reason. I understand that. Everyone understands that. The real question is, are you civil and reasonable given that situation, or are you going to make this an all-out fight?

To the extent possible, I strongly encourage people to be civil. It's not always possible. There are plenty of very difficult situations. But if you are civil, you have different options. There are versions... on an extreme case, if you're civil, you don't have a lot of assets, you don't have kids or complicated custody issues to worry about, then you can actually do a lot of the divorce process yourself, and what that looks like is you and your spouse sit around the proverbial kitchen table; you work out what's going to happen; you can do it online or go to an attorney and just say, "Draft it up for me." It gets drafted from an attorney or a paralegal, you have your agreement, you move on, and that's all there is to the process, and a percentage of people do it that way.

There are collaborative divorce processes and mediation processes where you... a little bit different, but the short version is with an attorney, with a neutral party, you and your spouse keep it relatively simple. You put all your cards on the table. It could be one session, it could be multiple sessions, depending upon the technicalities of the process that you're going through, where you all work it out on a room... or these days, via Zoom.

Dr. Marie Murphy: In the Zoom room.

Shawn Leamon: Yeah, you can do a Zoom mediation with a neutral third party or an attorney, and be a collaborative divorce process or a mediation process, and work out all the issues, and then someone translates that and takes it and creates an agreement.

Now, the more complicated process if I were just keeping it... the traditional divorce process is actually the toughest, because in that process, it's adversarial by nature. So, one person is the person basically suing the other person, and we have a plaintiff and a respondent, and the paperwork looks very, very formal, and one person is basically suing the other, and you have to go through some very complicated, often times very nasty, emails with attorneys, with the discovery process, which is just gathering all the financial information, figuring out how much things are worth.

But every step of the way can be a fight, and so, if someone is asking for... I'll give an example that just came up yesterday. Someone has a basic house. I don't know, it's $400,000, let's just say, approximately; nice house, not extravagant, but they're fighting over the value of the house. One person gets an appraiser, the other person gets an appraiser. Both appraisers have to fight out the valuation, and we're now $7,000 in legal fees on the value of the house. Now, you multiply that by absolutely everything that could be an issue, and you can see why that process can become very expensive and very complicated.

Now, unfortunately, one, this is common, and two, there are some couples that just can't resolve their issues, in which case, that's just the nature the process has to go, but there is a larger percentage of people who may end up going a more adversarial process that don't have to or don't need to.

When it comes to options, I always say, hey, see if something like collaborative divorce works, and look for a collaborative divorce attorney if you're halfway in decent terms with your spouse. Look for someone who's a mediator. See if that may work with your spouse. Look for someone who may just help you negotiate a couple of small issues; sometimes you agree on 80%, but need to work it out on 20%, or sometimes just one thing.

If you're in a position where you can go through the divorce process like that, then you should, and if not, when all else fails, you kind of have to go the traditional route where both of you hire attorneys who aren't generally very pleasant... and good luck.

Dr. Marie Murphy: Yeah. In the book, you talk about going to court and why it's so important to avoid it if at all possible. What are some of the reasons why you might have to go to court, and what should you keep in mind if you do?

Shawn Leamon: Let's talk about why you don't want to go to court first.

Dr. Marie Murphy: Sure.

Shawn Leamon: In most people's minds, because at least I am a big fan of crime dramas and have watched probably many lifetimes of Law and Order episodes, you envision some grand person talking on your behalf, and then you get to advocate, and there's great speeches, and the lighting is awesome, and people are cutting away to you, and this and that. No, sadly, that's not what really happens.

Most judges in most parts of the country are overwhelmed. They have hundreds, if not thousands, of people they have to deal with on their docket. Some courts in some counties... and a lot of this is very county by county, not even state by state... some counties, your judge may have just done eight traffic tickets in the morning, and then by the time, in your 11:00 AM right before lunch spot, they're dealing with your family law issue for 45 minutes, then they're going to lunch; then, they're dealing with a business litigation dispute. It's not the way it feels like, and they don't know you. I'm not going to say they don't care.

Dr. Marie Murphy: They're just thinking about lunch!

Shawn Leamon: Yeah, but judges are just people like us. They have a very important responsibility, but they aren't going to necessarily be able to get into every little detail of a case in your life the way that you think they will. They have hundreds of other people to deal with, and like every profession in the world, there are great judges. There are bad judges. There are great judges who have bad days. There are judges who like men. There are judges who don't like men. There are judges who like a woman in a blue dress. There might be a female judge who doesn't like women who wear blue dresses. Who knows?

It's not as fair as people may think it as.

Dr. Marie Murphy: Neutral.

Shawn Leamon: Neutral, right, exactly, as you may think... but, all that said, sometimes you have to go to court if you can't resolve things on your own. One of the things that happens is that every state has their own divorce process. You get assigned a judge, and a judge may ask... and it depends on your local divorce process; it's another reason to make sure you work with a good attorney... but part of the divorce process is let's have a preliminary hearing or preliminary meeting on one of these two things or three things or whatever, where the judge might say... so you might show up with your attorney and present the issues, and the judge will say, okay, well, we're going to set a trial for four months from now, but you're expected to have mediation in advance, or blah blah blah blah blah, and we'll set some conditions to get there. He or she will say, well, I hope you don't actually show up in four months. You should get this resolved beforehand, but we have this court date as a backstop.

A judge may say, oh, we need to make a ruling on a temporary support issue, so if there is some child support of spousal support that needs to be paid pending the divorce finalization... and when I say pending the divorce finalization, that could be a couple of years in many cases... then that's why you might be going in front of a judge.

But the real goal is, if you can avoid it, avoid it. But it is necessary in some points, and you'll need to be prepared if that is just part of your process.

Dr. Marie Murphy: Yeah, sure.

Were there any other options for the divorce process that we didn't touch on that you wanted to discuss?

Shawn Leamon: Those are the main ones. Broadly speaking, you can negotiate yourself or with partners, or just fight it out every step of the way. There's different ways you can negotiate it, be it do it yourself, divorce, or mediation, or collaborative divorce, or in some places, even arbitration, or even just around the kitchen table, as I said. You can do those, or you just say, "Let's fight."

Dr. Marie Murphy: Sure. Yeah. You talk about something in the book that I think is so important, not only when it comes to divorce, but in terms of any challenging situation in life, and that is figuring out what your least bad option is, or your least bad options are. Can you say a little bit about what you mean by that and why it's so important?

Shawn Leamon: Yeah, look, there is... and we touched on this a little bit before... there is a reality, and in my version of this, which I like numbers, sometimes there's only so much money to be split. You may look back and say, oh, I wish we had more here, or I wish we saved more, or I wish we didn't take this really expensive vacation every year, or whatever your wishes may have been... or he should be paying me more. She should be paying me more, or the system isn't fair because of X, Y, and Z. So?

That doesn't get us anywhere. You can complain all you want. You can wish all you want, but if you have... and I'm just going to make up this number... if you have $100,000 to split, and $50,000 is going to go to one person and $50,000 is going to go to the other person, then that just is. You can't say, well, I wish we had $350,000 to split. I wish you did, too!

Dr. Marie Murphy: It's not hopeful at this point, people.

Shawn Leamon: Yeah, I wish you did, too, but the reality is this. You need to make sure... and one of the biggest things I have conversations about is just accept reality. There are sometimes only two or three options in this process. They might not be great options. They might not feel fair to you. They may not feel good to you, but if these are the only options, and this is how things are going to play themselves out, you're going to have to just make the best one given the circumstances.

Dr. Marie Murphy: Yeah, for sure. This is something that I talk with people about all the time, whether it's related to relationships or job stuff or other life stuff. There is so much freedom that comes from realizing that some things in life are non-negotiable, but no matter what, you get to choose how you respond to those non-negotiables.

It's weird, because we want... by we, I mean collectively... people tend to want external circumstances to change so that we can feel happier, but that's not how it works. It's just not the way it is. That's not the option. The option is to change our internal response to the things that exist out there.

Shawn Leamon: I think that's a very good point. The best conversations I have with people are those who have figured out, or at least have a very good understanding of their internal responses, and have worked through all of that.

When I talk about... one of my big things from a financial perspective is... I hate to put it so harshly, because it sounds harsher than it is... I don't care how you feel. I just want you to make the right business decision given the circumstances, and you should treat this like you're the CEO of your life, because you are. There are some numbers, and there is some money that has to go here or there, or not go here or there. I don't care if you like it or dislike it.

It is the reality, and so, you go through it, but when people have done that internal work, or are working on that and have made a significant progress, it makes this process a lot easier, because one of the biggest things that's extra hard about divorce and the financial intertwining is that you're living it. There's a lot of emotion that's attached to that retirement account. Something I hear from guys all the time, mostly, is, well, I've been working for 25 years for that retirement account; she can't touch it! I'm like, well, that's not how the rules work!

This is, of course, a very traditional example I'm presenting, but maybe if your wife in this ultra-traditional example sounds... if your wife was raising your three kids who are now great adults and you're super proud of, even though there isn't dollar signs attached to that contribution, that was the partnership that you had and that's equally... I mean, I don't know how you value that, but it's just as valuable even though it's not a retirement account.

So, you have to just accept and work through those things. I just had a great conversation with someone yesterday who has been working... she had just come from her therapist's office, actually, before we spoke, but she had such a better understanding of... she was laughing at how absurd some of the things that were going on were, and of course, it doesn't make it easy, but she had a much better approach because she's been working on that internal stuff every day and every week.

Dr. Marie Murphy: Yeah. We could have an hour-long conversation about each of the things you just mentioned. I think the sort of bigger, overarching point is there is so much to be learned from interrogating our beliefs about money and what we're entitled to, and what it means for us to let go of our money, or share our money, or ask for money sometimes. That is really big stuff in our society, and I would suggest, always an opportunity for immense personal transformation and growth. It may not be the growth that you thought you wanted in your life at this particular point, but when you take that stuff on, so much change is possible.

What I see is that the more you're willing to reckon with whatever difficulties are facing you in the present, the better chance you have of being able to create a future that you're really excited about.

Shawn Leamon: 100% agree.

Dr. Marie Murphy: Yeah.

All right, Shawn, as you know, this show is all about expanding the conversation around infidelity, so I would love it if you could tell us about a time when you have been unfaithful to someone... maybe yourself, maybe another person, or to something.

Dr. Marie Murphy: Yeah, always a tough question. It flashes back to a time... I don't know, six, seven years ago... for context, I grew up in a military family and still have a lot of family members in the military. My dad was, and many other people in my family are now active. I didn't go, and I've always felt bad about that.

A few years back, I was driving in the car. I've always kind of regretted not going and thinking about part of my destiny, but it took a long time to figure out, that just isn't my life path. It doesn't burden me the way it used to, because I assumed that I was, I don't know, lesser than a lot of people in my family for that reason, and I let go of that as a terms of a piece of my identity.

Do I still miss it some? Yeah, of course, but I realized that sometimes it just isn't... it wasn't me. It wasn't my path, and it took a long time, a long time, to come to that conclusion.

Dr. Marie Murphy: Yeah. Yeah. I love that. Sometimes the hardest thing to do is to allow ourselves to be who we are.

When you said... I think you said, I still miss it sometimes, what do you mean by that?

Shawn Leamon: It's hard to describe without being around me a lot, but there's an element of me that... I love a lot of parts of the military. Some of those are just being a proud American, but also some of those are I like the challenge aspect; that's why I like the endurance... you mentioned very briefly at the beginning the endurance athletes... I find it incredibly inspiring, the people who sacrifice everything, and not necessarily death all the time, but are willing to put in every ounce of energy for a cause, or that cause could be the person next to them; that cause could be the country; that cause could be their family. Those who give it all, or at least willing to sacrifice some discomfort in something greater than them... and so, any way I can get a small piece of that makes me feel... and it is always just going to be a small piece, unfortunately, in my case, but just tasting that is something that I try to replicate in my life as often as I can.

Dr. Marie Murphy: That's so cool. Yeah, that's something we could talk forever about, too, but I bet you engage in elements of that in your work in all kinds of ways, maybe some that you recognize and some that maybe you don't.

Shawn Leamon: Yeah, now, that is an interesting conversation that I have never thought about before, so yeah, that would be something to think about.

Dr. Marie Murphy: Yeah. Yeah. All right. Well, we'll save that for another time, I guess. Reluctantly, we'll put that on the table.

Shawn Leamon: Next time!

Dr. Marie Murphy: Shawn, remind everybody where they can go to learn more about you and your work.

Shawn Leamon: Sure. Everything is at DivorceAndYourMoney.com, or if you ever just search Divorce and Your Money, you'll see lots of resources. I have a free podcast, a book, and lots of other just information that you can find just by searching Divorce and Your Money.

Dr. Marie Murphy: Awesome. Thanks, everyone, for listening. If you enjoyed today's episode, we would sure appreciate it if you would go on over to iTunes and rate and review this show. Thanks so much for listening, and Shawn, thank you so much for being here today.

Shawn Leamon: Thank you for having me. I really enjoyed it.

Dr. Marie Murphy: Awesome! Bye, everybody!

Thanks for listening to Your Secret is Safe With me, with Dr. Marie Murphy. Make sure to click Subscribe to get updates on our latest episodes.

 

 

Jan 17, 2021

In this episode, we interview Monica Mazzei, a top family law attorney in California with almost 20 years of experience. She will give us the ins and outs of mediation - and how it can be a great tool to resolve even the most complex divorces. To reach Monica directly, here is her contact information:

 

Monica Mazzei

Sideman & Bancroft

415.392.1960

mmazzei@sideman.com

https://www.sideman.com/professionals/monica-mazzei/

San Francisco, CA

 

Find the full transcript of the episode below.

Shawn Leamon: In this episode, I get to interview Monica Mazzei. And she is one of the top family lawyers in California. She’s worked on dozens if not hundreds of really impressive cases with some super successful people in California. And in our episode, she is going to talk to us all about mediation, the ins and outs, how it works, how to make sure it’s a good fit for you, how to get the most out of it. And why mediation may be really useful for your situation and why it’s something that you should consider, particularly in a world in which many courts are still closed, or at least are extra slow in a pandemic world.

And mediation may be one of the only ways you can get your divorce resolved in a reasonable timeframe. And it’s a much faster process. It is a more private process and Monica is going to walk us through all of the details of that. And for you listeners in California as well, as an added bonus she may be a good fit for you. So just something to think about. Without further ado here’s my interview with Monica. So today on the show I have with me Monica Mazzei. An attorney and partner at Simon and Bancroft based in San Francisco. Monica, welcome to the show.

Monica Mazzei: Why thank you. Happy to be here.

Shawn Leamon: Why don’t you tell us a little bit about yourself, where you are, where you’re from, your legal background, before we get into the meat of today’s episode which is all about mediation.

Monica Mazzei: So my name is Monica Mazzei. I have been practicing family law exclusively for nearly 20 years. I started practicing family law in Beverly Hills. And for the last 15 years my practice has been in San Francisco and Silicon Valley. I handle the financial part of the divorce, but I don’t handle any child custody. So I have a pretty unusual practice in that way. And being in the Bay Area as you can imagine, I work with a lot of technology companies, high net worth clients, and really enjoy practicing family law.

Shawn Leamon: And I want to get into mediation in a moment, but is mediation the focus of your practice or have you done other things in the past? I just want to get a feel and set the audience up for a little bit of your legal background and expertise.

Monica Mazzei: So my practice over the last year has been transitioning from representing clients in a traditional way in the divorce, representing one party either in settlement conferences or in litigation. Now transitioning to serving as a mediator. So I work with both parties to help facilitate an agreement. Those parties usually have their own independent attorneys that they consult with. But I’m there as a neutral third party to tell them what the law is, identify the issues, brainstorm ideas, and help them work out an agreement outside the court system.

Shawn Leamon: So let’s talk about the mechanics of that. And I think it’s very useful to have had the background from the traditional perspective that now you get to work with both sides and come with creative solutions. Why don’t you tell us a little bit more of just what is mediation and how does it work? And it’s a topic that everyone knows about in concept, but a lot of people don’t really know the details of what is mediation like. You said you’re the neutral person, but you also mentioned something about people also have their own attorneys. So can you kind of set up the background on the basics of mediation for us?

Monica Mazzei: Sure. So traditional mediation is when two parties meet with the mediator, nowadays it’s all by Zoom. In the pre-COVID world it was in-person with just husband and wife and the mediator in the room. And the mediator doesn’t represent either person. The mediator’s job is to tell you what the law is, identify the issues and give you some ideas about how you could come to a compromise that will work for both people. That’s a traditional mediation. Another version of mediation is where the parties show up and they each have an attorney with them. And so it’s kind of a group effort, a group mediation. And that you see in cases where there might be more complicated issues or very high net worth estates. Might be more of a group mediation with the attorneys. But I would say the most common and the traditional way is just the parties and the mediator, the three people.

Shawn Leamon: What you see most of the time it sounds like so they show up for a session and you’re the neutral person. And then it’s the two people talking it out. Can you tell us just what a session is like? You said it’s by Zoom, but kind of paint the picture. So are there breakout rooms or is everyone on the same Zoom these days? Just give us the mechanics of that.

Monica Mazzei: Sure. So typically we’ll start out with everyone in the same Zoom room and talk about what the issues are to discuss that day, how the day is going to work. And then typically we will be in breakout rooms. So each person will have their own Zoom room and I will shuttle back and forth in between. Really depending on the couple, sometimes we convene throughout the day the three of us again. But a lot of people really like having their own space, their own Zoom rooms feel freer to say what they want to say or ask questions. So I find that I think the most productive way is for people to at least part of the day have some space in their own Zoom rooms. Sometimes a mediation will last from 9:00 AM to five, six, seven, 8:00 PM and we’re able to resolve everything in one day. In other cases it might take two or three mediation sessions that maybe don’t go quite as long to reach an agreement.

So really depends on what the issues are. Mediation takes two people that are at least willing to come to the table and have a discussion and a compromise. I think mediation has become very, very popular in family law over the last decade. But with COVID and the courts being enclosed I think I’m seeing a flood of new mediation cases. People realizing that the courts might not even be accessible and this might be the most efficient way to get their divorce resolved or their premarital agreement. I don’t always just mediate divorces but premarital agreements as well. And I think people are really recognizing the value in mediation. Not only the cost savings but the emotional toll that a long strung out litigated divorce could take. And are just becoming more conscious of how they’re handling the unwinding of the relationship in general.

Shawn Leamon: Yeah. Let’s talk about some of those last points. We don’t need to get into all the details of the cost and what that may look like, but can you compare why it may be less expensive than the traditional route?

Monica Mazzei: Well, in mediation you’re paying the mediators hourly rate one typically the mediator is an attorney. If going the non-mediation route, you’re each paying separate attorneys. You’re litigating which is expensive. It’s a very slow process because the courts are so backlogged. They are not very accessible. Even in pre-COVID days, you may have to wait months to get in front of a judge if you have an issue that you need heard. It’s just really not an efficient way to handle a divorce. And I think that many, many more people are going to be turning to mediation in the next couple of years.

Shawn Leamon: Well, let’s talk about the speed issue because that’s a very important one because we all know that divorces can drag on a year or seven sometimes depending upon the situation. Hopefully not that long, but it certainly does happen. If someone is in a situation and I know lots of people who are listening are in the preparation phase and they’re trying to figure out a lot of things, but one of them is how do I go about this process? And cost is always a consideration, time to get everything resolved is a consideration. But if someone’s just starting the process and they think they can go the mediation route with their spouse, how long does it take assuming they can work through their issues in a few sessions? Kind of start to finish what does that look like for someone and walk us all the way through?

Monica Mazzei: Sure. I mean I think generally if there’s not overly complicated financial issues, I think three to four months is a fair timeline in a mediation. You have to choose your mediator and that entails both people agreeing on the mediator to use. So as you can imagine if two people are divorcing, making a decision about what mediator to use could take a few tries. Both people have to have a consultation with the mediator together and make sure they’re both comfortable with that person and they both want to work with that person. And then it’s scheduling the mediation and there’s some paperwork also involved and getting the divorce process started.

But the great thing about mediation and now doing it online is it’s much easier to work around people’s schedules, the work schedules of the parties. I do many mediations that are after 5:00 PM because people have kids and Zoom school and jobs. So it’s a very flexible alternative. So I would say generally three to four months from start to finish from choosing the mediator, getting the paperwork in order and having a couple sessions and getting a settlement agreement.

Shawn Leamon: Versus a traditional agreement, which takes what do you see on average with your cases if you were just going to go the litigated route? A year, two years, how long does that go?

Monica Mazzei: I would say two years is a good average for my litigated cases. The longest case that I had was eight years. That went on eight years but yeah, I think the average is two years.

Shawn Leamon: Got it. No, I think that’s great. You brought up something that was interesting in your answer which was that the couple has to agree upon the mediator and choose a mediator that will work for them. It’s a big decision, how does someone choose a mediator? One is find a mediator, of course it’s hard to find a mediator. It’s a topic that we discuss a lot on the podcast. But how do they find one, how do they choose one? And if someone is… And kind of third part of that, if someone finds someone they like you, how do you convince your spouse to also show up to that person and take the appointment?

Monica Mazzei: Well, finding a mediator now we have all these resources online. There’s a great website called mediate.com that has a lot of family law mediators listed on it. It’s a great resource, there’s a lot of good family law mediators on that website. Word of mouth is also another good way. If you have a friend and they liked their mediator definitely check that person out. I think choosing at least two people to have a consult with or interview is a good idea so you have something to compare and contrast to. You both have to be really comfortable talking to this person, talking about intimate details of your marriage or finances.

So I always advise people interview two mediators. You want to make sure that the mediator that you choose has experience in the issues you need to address. So for example if someone has a really complicated custody issue, I’m probably not your person because I haven’t handled any custody issues in over a decade. But if you’ve got issues with stock options or private equity or just private investments, I have a lot of experience in how to divide those assets and value them.

So you want to make sure the mediator has experience with whatever your issues are. Maybe you own a family business together and has the mediator ever dealt with that before? You want to ask those questions of the mediator. You want someone that’s familiar with your issues. Because the great thing about mediation is when I’m mediating a case for example that involves a family-owned business, I’ve had to handle that issue in divorce cases so many times that I can give the parties a whole bunch of ideas about what other people did and how they resolved it. And it just kind of helps for people to hear what creative options are out there and what other people have done.

Shawn Leamon: It sounds like one of the questions to ask is have you dealt with situations like mine or do you deal a lot with situations like mine? Are there other characteristics to look out for in a mediator? One that may be simple which I don’t know the answer to is are all mediators former attorneys or attorneys active attorneys or judges or what other kinds of things should someone be looking out for as they make their mediator selection? And also are there any red flags that you may want to look out for as someone looks at different mediator options?

Monica Mazzei: So, in California you actually don’t have to be an attorney to be a mediator. So in family law you get a mixed bag of mediators. Most I would say are attorneys or were and others are more mental health professionals or therapists. I think it depends on what your issue is. If you have a lot of custody issues maybe having a mediator that has a background in child therapy or behavioral therapy is a good choice. If you’ve got some financial issues I think having an attorney that has experience in those issues is probably the way to go. Not all mediators are created equally. I think a red flag would be a mediator who doesn’t have any experience in family law that mediate personal injury cases and this is their first family law mediation. You might not want to be the guinea pig for that mediation. So someone that has handled family law mediations before.

Shawn Leamon: And to that point, I mean if you were to have a therapist help with the mediation or something like that, how in your experience do people actually write up the resolution to a mediation session? Because I imagine you’re going to come to an agreement at some point in the process, but then what happens?

Monica Mazzei: So if you have an attorney mediator like myself, the attorney mediator typically prepares the settlement agreement. So that’s what I do, once the parties have reached an agreement I’m the one that prepares the settlement agreement. I always advise the parties that they should each have an independent attorney review it before they sign it. And I would prefer that, but that’s up to the parties. So if it’s a non attorney mediator one of the parties is going to have to have an attorney prepare the settlement agreement.

Shawn Leamon: Yeah, you mentioned other attorneys involved and I want to shift gears and discuss that for a bit. Is so in your examples normally there’s of course the two people who are actively in the mediation session, the people getting divorced or negotiating a prenup or whatever the situation may be. But they may have their own attorneys as well. Can you describe how that interaction and interplay works between what now seems like five people I suppose in this example?

Monica Mazzei: Sure. So when we have a mediation where both parties have their attorneys actively involved in the mediation session, it looks pretty similar. So for example if we’re on Zoom, we start in one Zoom room altogether and typically talk about how the day is going to be broken up or what we’re there to discuss. And then each party will go to a separate breakout room with their attorney with them. And I shuttle back and forth between the rooms. Cases where an attorney… The parties might want their attorneys to be involved, sometimes if there is a big disparity in experience, if one person has been running a business or is very financially savvy and the other person is not, maybe that is a good place to have attorneys present. Because again, the mediator doesn’t represent the parties. So if there’s a big disparity that might be really helpful to have attorneys there. In family law cases sadly, there is more common than I would hope abuse issues do arise, domestic abuse issues.

That’s another case where perhaps it’s appropriate for the attorneys to be involved when there’s that dynamic going on, just to make sure that the victim, the abuse victim, is feeling properly represented and someone is there to make sure that they’re being advocated for. And then I think the third situation would be really complicated financial issues. Any divorce case involving a hedge fund, a venture capital fund, a private equity fund, those cases typically attorneys are going to be more involved because they’re very detailed financial issues that at least one of the parties might not be familiar with. Those cases typically the attorneys are going to be involved during the mediation and present for them.

Shawn Leamon: That’s a good segue. I know some attorneys who aren’t big fans of mediation sometimes and they’ll say, no, no, no, no, no, no, no, no, no. If you have complicated issues and you can’t deal with them in mediation, we got to subpoena this and fight that and do this order and that whatever. How do you handle complex issues in mediation? And is it a good forum? How does that work itself out? Because I know some people rightly or wrongly may think it’s not applicable or not feasible in a mediation session to come up with solutions for some of these things.

Monica Mazzei: It all depends who the mediator is. I think that mediation is a great way to resolve cases involving those types of businesses and those types of compensation. If everyone involved has the same experience level including the mediator, you can really cut through a lot of the education of a public sitting judge, for example who doesn’t know how hedge fund managers get paid and doesn’t know what carried interest is. If you have a mediator that you don’t have to educate that knows how everything works, you can hit the ground running and start negotiating a lot sooner than you would ever get in the court system. And there’s also accountants involved and in those cases, there’s a big team of people, but it is a great way to settle cases involving those businesses. If the mediator is financially savvy enough and has experience, it really is efficient and you can really come up with some creative out of the box solutions.

Shawn Leamon: And so it sounds like even though mediation can be faster and there’s a lot of benefits to it, it sounds like you can still bring in a lot of the traditional divorce resources that you would use perhaps in a litigated manner but it’s just not the same atmosphere in which you may have valuations, you may have different things you have to do with stock options or figuring out what’s going on with the hedge fund or private equity fund. And you may need to bring in some other financial professionals, it’s just the context. And the way that you end up at a resolution is just different and a lot more efficient and streamlined.

Monica Mazzei: Yes, more efficient, less adversarial. But I think there’s a misperception sometimes in the public that mediation is like everyone’s sitting around the table, holding hands, singing songs and it’s too touchy feely, how can you possibly resolve a complex case with a hedge fund that way? And it doesn’t really work that way. Mediation can definitely deal with high level complex issues. Just because it’s mediation doesn’t mean that we are throwing out all the rules and how things work and it’s just reaching an agreement. One, that works for everyone and two, is a lot more efficient.

Shawn Leamon: When coming up with an agreement a lot of times you’ll hear or someone will say well, the judge will say this and that’s the guiding principle for how people come up with a resolution. Is that the case in mediation? What I’m getting at is there’s the letter of the law, but the letter of the law isn’t always clear, but a lot of times people say, “Well, what would the judge say? What if we just took it out?” And that’s kind of their position. Or is there some flexibility in mediation? How does that dynamic play itself out?

Monica Mazzei: Well, the great thing about mediation is people can agree to anything that works for them. When you go to court and you go before a judge and in family law in California we don’t have juries and family law. So you have one judge that makes the decision. In my experience, both people leave the courtroom not happy with the decision. Both people, they have no say in shaping it. Sometimes you get a judge who woke up on the wrong side of the bed or who didn’t understand what the issues were and totally got it wrong. Mediation gives the parties an opportunity to have a say in the resolution. And they often will say well, what would happen if we went to court? And so I do give my opinion. Well, the law says this.

But I always like to follow it up with, but let me tell you what some other people have done in mediation with the same issue and give them some ideas to start thinking outside of the box and a way from maybe just what the law provides. The law is not flexible, it doesn’t conform to the differences in families and how a particular family works. And it’s very cookie cutter. And I don’t think that necessarily works in a divorce situation. In mediation you can really get creative. As long as we’re staying within the tax code and things like that, we really can come up with anything that works for that particular couple.

Shawn Leamon: And on the other side, what about privacy? I imagine that in a mediated session you don’t have to just… I mean you disclose things with your party as part of the process, but what kind of public information gets disclosed in mediation versus a traditional process?

Monica Mazzei: Everything in mediation is confidential. So unlike if you’re in court, you’re in a public forum. Sometimes there could be 30 to 40 people sitting in the courtroom, hearing all about where you live and how much money you have and your kids’ names. It’s a very public way to go through a divorce. In mediation, no one is there except for the two of you and your mediator and perhaps your attorneys and everything that you say in the mediation is confidential. And there is very little paperwork that has to be filed with the court if you’re in mediation. So the petition to start the process and we’re even able to submit a confidential settlement agreement to the court. So very, very limited paperwork in the court system. But I think more importantly you’re not in a public forum and you’re in a conference room or on Zoom with the mediator.

Shawn Leamon: And so we’ve gone through a lot of the basics of mediation and I want to get to a couple of concluding questions. The first is what happens if mediation doesn’t work, what happens then?

Monica Mazzei: Well, if mediation doesn’t work then the parties will have to each get an attorney if they don’t already have one and decide what their next step is. Are they going to try to just negotiate through the attorneys and not use the mediator at all? Or are they going to go the court route? Which to me is always a last resort. I think the cases that fall out of mediation are the cases that were just not good cases for mediation to begin with.

Shawn Leamon: And I think that’s a great transition to my last question or one of my last questions is someone’s thinking about mediation, I think it’s a very compelling and I believe a lot of people after hearing this will say this is a really compelling option. If someone is thinking about it, how would they know if they’re a good candidate for it? Why don’t you just kind of go over those key points to say like yeah if you’re in this situation here’s how you know that mediation may work for you or may not work for you, but can you kind of go through that?

Monica Mazzei: Mediation takes two people. You can’t force someone to participate in it. So that is going to be the big telltale sign. Is, are you both like-minded? Do both people want to go the mediation route and are they both going to be engaged in the process? If you feel like you’re dragging someone to mediation kicking and screaming, that’s probably not a good case for mediation. Both people have to be willing to say, “This is horrible, going through a divorce is horrible, but we both don’t want to go to court. So let’s pick a mediator and use this alternative. I still don’t like you, but I’m willing to go to mediation.” So fundamentally that’s not going to be the situation for everyone. If you’re met with resistance, then you’re not going to have an option. And in my experience trying to force someone or cajole them into mediation you’re just setting yourself up for failure and probably a waste of time.

Shawn Leamon: So mediation doesn’t have to be easy, but both people are going to need to agree to it?

Monica Mazzei: Yes.

Shawn Leamon: Well, Monica if people want to reach you, particularly the California listeners, what’s the best way for them to do that.

Monica Mazzei: They can email me at mmazzei@sideman.com

Shawn Leamon: Excellent. And do you work all over the state in the Zoom world?

Monica Mazzei: Mainly just California, I’m only licensed to practice in California. I can handle mediations outside of California, but I wouldn’t be able to prepare the settlement agreement.

Dec 27, 2020

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In this episode, I want to discuss an important term called co-mingling. That is the process in which you can inadvertently make separate property, marital property. Co-mingling is a very important term when it comes to divorce, and I'm going to use an example of an inheritance because it's a very common example.

 

Let's just say you receive an inheritance from your mom, I'm just going to make it up, and let's just say you received $100,000 from your mom because unfortunately, she passed away. Well, if you receive that money, the perfect circumstance or the ideal circumstance is you deposit that money into a separate bank account and you never move it to your joint bank account and you only track and... In a perfect world, you don't even spend that money. You save it for a rainy day. But let's just say you have to use some of it for a down payment on a house, and so you use that money for a down payment on a house. You and your spouse now have both of your names on the house, but that down payment came from that inheritance. That's a common example that I hear almost every week. Or even you needed the funds for daily living expenses and you started mixing those funds in and you move that money to a joint account. Well, when it comes to the time of divorce, you have to say, "Well, hey, is that money, is it separate property or is it marital property?" And it starts to get really complicated because it depends.

 

Now, if you got that money first, and let's just say you used it for life expenses, and you used that money and you put it in a joint account from that inheritance money into a joint account. Well, those funds may have become marital assets, inadvertently, because of that. Or if you used those funds for a down payment on a jointly owned house, does it immediately become marital property? Now it gets a little bit more complicated. This subject is very complicated and it depends on your individual circumstances, but I want to give you the highlights as to what you're going to be thinking about if this is an issue in your divorce.

 

Conversely, you could be on the other side of this situation too, where your spouse got an inheritance, and sometimes it's a pretty substantial amount, and you're trying to figure out, "Well, hey, we used some of that inheritance for these one, two and three things. Does he or she get credit for that money? Does that money come back? Is that joint property? What's the deal? What do we get to do with that?" So that is where this process becomes very important to understand from both sides of the spectrum.

 

So the first part, and the term that I'm going to introduce to start, is called tracing. So the first word is co-mingling, and that's the process of making a separate property, marital, broadly speaking. Now, tracing is a very important term, and that is figuring out where the money came from. Simple as that. So if you had, let's just say, a gift from a parent, and let's just say that gift came or that inheritance came eight years ago, and then five years ago you used that money to buy a house. And then now fast forward five years, you're facing a divorce situation. Well, you want to keep that inheritance separate, is my guess, and you don't want to split the funds that your parent gave you. So how do you figure out and prove, basically, that that inheritance is separate property? And conversely, if you're the one who's contesting this situation, you're going to have to make your spouse illustrate where all of that money came from and have the records for it.

 

So that's where tracing comes into play. Very simply, it's just figuring out where the money came from and going through that process of, "Hey, eight years ago, those funds were deposited into this account. And then five years ago, it was wired to this company for the down payment on the house." And you need to go through that process and have all the steps involved, and it's not an easy one oftentimes. So here's where one of the most important things you'll hear me always talk about is having good documentation. That's the problem and that's really the biggest challenge with co-mingling is having the documentation.

 

If you've been married for a long time, and I speak to people who've been married 20, 30, 40 years oftentimes, and you may not have clean records for where every dollar went. It's something that's very important to think about because state rules can vary on the subject in terms of what you should do in those situations. And one of the things you're going to really need to focus on is gathering documentation. Because sometimes in a state, the burden is, and really you need to talk to your attorney about this point because there are a lot of nuances on the burden, but some states will say, "Hey, unless it can be proved it's separate property, it's automatically marital property." Other states have a little less restrictive or a little bit more flexible burden on that very point.

 

So you really need to understand what's happening, but the clean way to figure things out is to have records. So to get records, you can... The first thing is that even if an account is old, you might not be able to log into your Bank of America account or Chase account and see records more than two or three years old. But if you walk into your local Chase branch, or you set up an appointment, you may be able to get records from the time you've had the account. I've been in banks with clients before where you go and you figure out, "All right, well, here's the time that we had the account" and they'll go back and they can go to the bank and get 10 years of records. It might take a couple of hours, but it is a very doable thing to do when you go into the bank.

 

Now, it can be tough and you still may not have all of the records, but also look for old correspondence. If you've had the same email account, or if you have any mail, or if you keep a safe or a file cabinet with important documentation. Or sometimes if it's related to an inheritance, you may have or you may need to contact the old attorney who handled the paperwork if an attorney handled it. Or your sibling, sometimes maybe you don't have it, but if you have a brother or sister or something, you might be able to contact them and figure out what kind of shreds of evidence sometimes it is, particularly, we're talking about something 10 years or eight years in the past, you may have to keep things clean. Now, sometimes it's not a big issue when it comes to documentation and you have everything there. But if you don't, those are some tips I would suggest for you.

 

Now, let's just say not all things are clean and smooth, and let's just say this is going to become a big issue between you and your spouse as part of the divorce process. What do you do? That is you're going to have to bring in some experts. There are forensic accountants and CPAs who do this work and can help figure out, "All right, what part is separate? What part is marital?" And sometimes they may even come up with estimates. But if you get a good accountant, they will look at what of information that you have or that your spouse has, and they will say, "Okay, well, I can see 70% of the picture" and they'll say, "Okay, well, from my best judgment, I think this amount of money is separate property and this amount of money is marital property." They can sometimes estimate or even trace with imperfect information where funds came and went.

 

So if you have a lot of money at stake, and sometimes it is, if you're dealing with hundreds of thousands, if not millions of dollars that you're trying to figure out, "Hey, what is separate property? Hey, what is marital property?" Then you should strongly consider getting an accountant or a forensic accountant to help you.

 

Now in a perfect world, and I always say this about hiring experts who do valuation or forensic accounting, et cetera, is in a perfect world, and we're talking about divorce so almost nothing is perfect, you would get a neutral person to look at all of the available documentation that you and your spouse agree upon. And will have that person analyze everything, prepare a report, and those are the numbers that you use to determine separate or marital property. Now, that's not always the case. Certainly, I see all the time where one person is hired by you, one person is hired by your spouse, and they come up with very different valuations of what is separate property and what is marital property from the co-mingling and the tracing that they do. And you have to basically fight it out, unfortunately, or come up with a middle ground.

 

So something to think about, but as I said in the previous episode is really to the extent that you can keep things separate and avoid making things separate, or making separate property marital, you should. Now, not all the time are you walking around your life and thinking that I'm going to get divorced tomorrow and therefore I need to have done these things eight years in advance. I understand that life doesn't work that way and so you shouldn't necessarily feel bad because you've made the wrong decision, but you do need to... Or you didn't have the records, or you didn't keep things as cleanly as you would like. But even despite that is you need to get on top of and start collecting and getting the information on all the records that you don't have and start planning for the future and putting yourself... I always say this is even in an imperfect situation and imperfect world, you need to start putting yourself in a very good or the best situation you can for the future to ensure, or at least to help ensure, that things are going the way that they should through the divorce process.

 

And if you gather up as much documentation as you can, you gather up some of the records, you might not be able to get 100% of the money back or prove 100% is one way or the other, but hey, if you get 80% of the way there or 70% of the way there, you are still in a much better position than before.

 

So the important term for this episode is co-mingling. And if you are thinking about your individual circumstance, this is a really complicated term, both legally and involving individual circumstances, and involving your state's laws, but I would type in co-mingling in your state and I would look at some attorney websites. I would contact your attorney and figure out, "Hey, what do I need to be thinking about both good or bad when it comes to co-mingling in my situation?" Because it can mean the difference in many thousands, hundreds of thousands, or in some cases, millions of dollars that go from one person to another.

Dec 3, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

 

It's been a little while since I have done an episode and it's been a very busy couple of months, so apologies about that. But I want to discuss a topic that's been coming up quite a bit in the coaching calls.

 

And that is how you handle inheritances and gifts during a divorce. It's a tricky question. And it's an important question because oftentimes your parents, or someone, will leave you a substantial sum and you want to protect that during the divorce process. Sometimes that inheritance money comes at a poorly time to time where you can't control it. Someone passes away, unfortunately, and you receive some money maybe right before a divorce or during the divorce process. And you're trying to figure out, well, what should you do?

 

I just spoke with someone the other day who had filed for divorce and then, unfortunately, a parent passed away, eight months into the divorce process And they were wondering, "Well, how do we handle this new inheritance that arose, and what to do about that?" And so in this episode, I want to give you some tips when it comes to handling gifts or inheritances and how to protect that property. And really, the main thing is how do you prevent it from becoming a community property, which is the property that is subject to, or that you're going to end up having to split as part of the divorce process.

 

So let's go through a few quick tips.

 

The first thing is if you receive an inheritance, or you receive a gift from someone, keep that stuff in your name only. Meaning, if you get some money, let's just say a hundred thousand dollars, because I'm going to use that as an easy example. If the parent passes away and gives you a hundred thousand dollars, don't deposit that into a joint bank account. Set up a separate bank account that's in your name only. And we're going to call it your inherited funds account. And so put the money in that bank account separately so that it doesn't get commingled with the other assets. And that could get complicated because not always is an inheritance a gift. Sometimes it may be a home or a car or any other type of property. Whatever it is, make sure to title it in your name only.

 

The second thing is don't let your spouse make any contributions to that gift or that inheritance. And the house is the easiest way to illustrate that. If you inherit a house and let's just say it's been run down for a little and it needs some repairs to get it up to speed. Well, one of the things that you should do is don't let your spouse contribute financially to those repairs because the value increase of that house, or even the whole house itself, depending upon where you are, could now come into question as part of the divorce process. And sometimes this may be a house that you maybe just made renovations or adjustments on a few years ago, and now the divorce process is happening. And now you're wondering, "Well, is any part of that house marital property, because my spouse helped renovate the master bathroom and bedroom in there?" And so if that's your situation, be very careful and think through what you're going to do with that inherited property. And if you can keep your spouse from making contributions to it, financial or labor even, then you should do so.

 

The third thing is to consider transferring that inheritance or gift to a trust. Now, oftentimes a parent who was savvy in estate planning, or at least inheritance is most commonly from parents, which is why I use that example, are very savvy in their estate planning. And so oftentimes as part of their estate is they will give you that property, be it cash or the home or whatever, jewelry or whatever it may be, and they might require it to be put in a trust as part of the process. But if that wasn't the case for you, I would consider setting up a trust.

 

Now there are lots of complications and nuances to having a trust set up for you. But what I would do is if you have an inheritance coming, or you recently got one, or you're thinking about it, I would go and look for an attorney called an estate planning attorney or a trust attorney. And they're kind of one and the same and they can illustrate options for you to set up a trust. Now, usually, there are some fees involved, of course, we're talking about legal work, but it can be worth a little bit of trust set up in the short term to protect you in the long-term.

 

And then the last thing I would strongly suggest is to keep really good records about where the inheritance came from, how much money was in there, where the funds went, et cetera, et cetera. One of the most common things that I deal with and see people make a mistake with is not keeping track of the money and keeping track of the details of an inheritance. And so what can happen is, let's just say you got an inheritance seven years ago and you knew it was approximately $123,000 but you don't remember the exact math that was there. Well, one of the things that you can do, error the exact amount that was in there because seven years have passed and you want to know. Well, if you don't know what that amount was and your spouse is going to contest it in terms of how much was actually in that inheritance, you could be setting yourself up for a world of potential hurt in that you may end up losing part of your inheritance in the divorce process since you didn't keep accurate records.

 

And so, one of the things that is most important to do is make sure that you keep track of the paperwork. Keep track of any emails. Keep track of any bank statements. Keep track of any lawyer's correspondence or documentation to ensure that the information that you have from the inheritance is kept and kept track of over time and kept cleanly. Because one of the things that can happen is, let's just say, hypothetically, you've received an inheritance of that $123,000, and the next year you purchased the house with your spouse and use those funds as a down payment. That's something that's very common. And then three or four or five years or 10 years, whatever the amount is, goes by and now you're facing divorce. And you're like, "Well, I contributed $123,000 to that down payment of the house from this inherited gift."

 

Well, the good news is that even though you may not have followed my initial steps or initial tips, my tips one, two, and three, that you still may be able to get credit for that money as part of the divorce process and consider it still separate property if you have accurate records. But you need to make sure that you have very accurate records of where every dollar came from and where that inheritance money went. On the other hand, if you didn't keep accurate records, you may lose those funds and it may become a costly issue. And it's something that you want to be very careful about. So it's one of those things where you need to make sure that you find every piece of documentation that you have related to that.

 

Now I've been talking mostly in the context of inheritances because that's the most common, but oftentimes I also see a parent give a gift to you and or your spouse. And what can happen is some money flows in, it's usually pretty informal, gifts around $14,000 or so are not taxed. But sometimes they're bigger gifts. And you forget, because of the size of the gift, to go through all of the steps and document everything. You may have just had a phone call with your mom or dad and your mom or dad just said, "Oh, I'm writing you a check for, here's a $10,000 check for some spending money." And if you're fortunate enough to have parents who are in that position and then you're like, "Oh great. This is a good check." And you use it for something important, but you want those funds back as part of the divorce process because you feel it's appropriate given the situation.

 

Well, one of the things you should make sure that you do is you need to have a list of documentation from your parents. Your parents, your mom or dad should say, "Hey, I wrote you this check for $10,000." You should have some emails from the time of the check. You should have other correspondence from that time. And you should indicate that all of that stuff happened and happened smoothly because that way you can prove where those funds came from. But just because it's casual or just because you may not be thinking about it at the time and divorce may not have even been on your radar at the time of the gift, which is okay, but you need to make sure that whenever money is coming in from a source, particularly a family member, that those transactions are documented and you gather that documentation.

 

So the four most important tips for protecting your inheritance or gifts in divorce. And I'll just go through them quickly. One is to keep inheritances or gifts in your name only. The second is don't let your spouse make any contributions to that account or that property to ensure that it stays separate. The third is to consider contacting an estate planner and transferring that inheritance or that gift to a trust. And fourth is to keep really good records as to where that inheritance or gift came from.

Sep 21, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

One of the most common questions I get, and one of the biggest anxiety producing questions I get, is how much is divorce going to cost? How much should I expect to spend on the divorce process? And if you're going to ask your attorney how much divorce is going to cost, they're going to say it depends. And I've never known an attorney to give a straight answer when it comes to the cost of divorce. 

And so in this particular episode, I want to go through some considerations in terms of how much the divorce may end up costing you in terms of the financial check that you might have to write. So I'm going to just give some ranges and some considerations and things to think about as it comes to the divorce process.

Now everyone's situation is different. Divorce can cost more whether you live in a city, versus a suburb, versus a small town. Divorce can cost a lot depending upon what assets you have, what needs to be done. There's a lot of variations, but I'm just going to give you a range. And so on the low end, from what I see per person, I see the minimum, minimum, minimum, most people are going to spend on their divorce is about $5,000. And that's for one person. And so it'd be $10,000 as a couple. And that's assuming that everything goes smoothly in divorce, and yes, there are ways to make divorce go smoothly, but that's your best-case scenario. 

Now, the normal range I see for people is usually in the 20 to I'd say 35 or $40,000 range per person. Sometimes it's closer to 15. Sometimes it's closer to 50, but that unfortunately is not uncommon when it comes to the divorce process. And sometimes if there's just a lot of fighting, a lot of complication, the process is going to drag on for several years, the bills can get into the hundreds of thousands of dollars, and I've seen that too.

And so what I want to go through is first to be aware of the cost of the divorce, and if you're going to be going down this path. I mean, that's why you're listening to this episode. There is a big expense, and you have to really think about what's worth it, and what's not when it comes to investing in the divorce process. And I want to go through a few ways in terms of explaining both how you could control the cost of divorce, and also how to figure out just a few quick methods on how to pay for it.

When it comes to minimizing or controlling the cost of divorce, really the biggest expense when it comes to divorce cost is how much you and your spouse disagree on certain items. To put it a different way, is if you and your spouse can come up with solutions on your own, and come up with as much of an agreement as you can between the two of you and not involve attorneys, the cheaper the divorce will be, the less expensive it will be. 

And so if everything is a fight, and I use an extreme example all the time, is I grew up with a middle-class family. They did well for themselves, saved, and they had several hundred thousand dollars of savings, and a house and the normal stuff. And they spent 100% of their money and then some fighting over everything, from not just the big items like houses and retirement accounts, but all the way to who gets the dining room set. And unfortunately, they ended up in the divorce process, they spent hundreds of thousands of dollars on legal fees, and that was all the money that they had.

On other examples, I know billionaires who've gotten divorced for less than $20,000, and that's because they came up with an agreement ahead of time with their spouse. And yeah, maybe the check they're writing to their spouse is going to be pretty substantial, but they knew what they were going to do. They were smart about legal fees, and they did a very good job with it. And so really it just depends on how much fighting there is.

And just some other costs to think about is if you go the full litigation process, where you get an attorney, your spouse has an attorney, and you're going to discuss and fight about every detail. That's going to start at a minimum of $10,000 a person. Every time you have to hire an expert, be it someone to do an appraisal for a business, do an appraisal for a house, do a forensic accountant. Each time one of those experts get brought in, expect that to be another 10 to $25,000 each, in addition to legal costs on top of that from analyzing the reports and discussing it. And if you were to take that to trial, that check just keeps getting larger and larger.

Divorce attorneys are very expensive. I mean, on the low end, I think a good attorney can be 250, $300 an hour. And on the high end, I know attorneys who are 900 to $1,000 per hour of their time. Imagine that. So a 15-minute conversation can cost you $150 sometimes, with your attorney, or sometimes just sending a one-off email. And so you need to be very smart about how you interact with your attorney, and how you use that attorney.

I already mentioned other professionals, but there are also court fees. You have to think about an attorney's full team, paralegals, assistants, et cetera. There's a lot that can go into a divorce and divorce fees. And so one of the questions that you should be thinking about, and one of the most important things we talk about in the divorce process, or I talk about on coaching calls, is how are you going to pay for this? That's one of the most important questions that I get from people all the time.

And I'm going to go through just a couple of quick items to think about. If you have money in a joint account, generally speaking, you're entitled to half of those funds. Generally speaking. So if you need to withdraw half those funds to start putting your little war chest together for attorney's fees, then you should do so. 

Now by doing so, you're also going to definitely be tipping your hand in the divorce process, but that's something that may be necessary, particularly if you didn't originally have funds to go through the divorce process. If you have savings, then you can consider using your savings. If you have savings in your own name, if you need to borrow funds from a friend or a family member to make the initial retainer for an attorney, then borrow funds from an attorney. 

And then there's also retirement accounts and home equity lines, and other things like that you should be thinking about. But when you walk into an attorney's office and say, "Hey, I want to hire you for my case", you should be expecting to write a check for anywhere between five and $25,000. The day you hire that attorney and anywhere within that is very much normal range.

And so I just want you to be really cognizant of the cost of divorce, and the things that you can be thinking of. The biggest factor as I said is acrimony. And so if you can come to, and I work with a lot of people in this situation, where you and your spouse, let's just say, there's 10 issues that you're discussing and have to fight over, if you can get to an agreement on eight of them, and then you only have to work out two issues, then that can save you a lot of money in your divorce because there are only two things that need to be discussed versus starting from scratch with all 10.

And so things like that can help you save money in divorce, and maybe it can be a small thing like, hey, if you can start a negotiation when possible with your spouse, it's not always possible to negotiate with them. But if you're in a situation where you can say, "Well, I think we're going to both keep our cars." Well, you've already started an agreement on that. 

And that's one less thing you can check off the list, and just getting the cars agreement set in stone before having attorneys have to negotiate over it could end up saving you a few thousand dollars. So sometimes even a smaller items that you can come up with a can help you, but if you continue to drag out the process and every attorney wants to beef up there, I won't say every attorney, but it doesn't hurt the attorneys when you have more to fight about. It's something to be aware of as you go through the divorce process.

So just as a quick recap, on the low end, divorce can be five or $10,000 a person to get things done. If you have an attorney involved, and on the high end, it can go, I'd say the average is usually around the 25 to $50,000 range. But if you are fighting about everything and this goes to trial and you have money to take it all the way to trial, legal fees can get to $100,000 or more. So be very wary and very well prepared when it comes to figuring out what's the right investment that you need to make for your case. 

And sometimes I'll tell people like, "Hey, I don't know if you want to spend an extra $10,000 on this issue, because it may not be worth it for you," but other times I'll say, "Yeah, you know what? You should spend $25,000 on this issue because if you get $300,000 in return, that's a useful return on investment to invest in legal fees."

Every situation is different and there are always lots of complications depending upon what's going on, but be prepared for the cost of divorce if you're going in that direction, and go in with eyes wide open. Regardless, it's going to be an expensive check that you're going to write, and it's up to you to be prepared for it, and determine what really is appropriate given my circumstances that you're willing to put into this process to secure your future and get through it in one piece.

Aug 10, 2020

To get in touch with Nicole Noonan, visit newchaptercapital.com or call (212) 404-7807. Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

Shawn Leamon: All right. Today we have Nicole Noonan. She is the CEO of New Chapter Capital, which is a firm that deals with a topic we haven't covered in a while, but a very important one, which is divorce funding. Nicole, welcome to the show.

Nicole Noonan: Thanks so much. Happy to be here. Yeah.

Shawn Leamon: Why don't you tell us what New Chapter Capital does? What is divorce funding? What does that mean?

Nicole Noonan: So New Chapter Capital and divorce funding provides liquidity for individuals going through a divorce, that would not otherwise have access to it. So we provide an advance against the potential settlement. And the advance can be used for legal fees, expert costs, and for living expenses.

Nicole Noonan: And this is something that I saw, in my own practice, a real need for, where one spouse had more money than the other. And they cut up their credit cards, and try to back them into taking a settlement less than what they're entitled to.

Shawn Leamon: And so, to simplify, I mean, liquidity is money. So you're giving them the funds to get through the divorce process.

Nicole Noonan: Exactly. Yeah.

Shawn Leamon: And the objective then is to level the playing field, it sounds like.

Nicole Noonan: Right, right. So they can go out and hire the right attorneys, the right experts. We don't want someone to have, I'm going to use a generalization, their husbands go out. They're the money, the bread earners. They're going to go hire top counsel for the divorce.

Nicole Noonan: And the wife is going to have to go borrow money from friends or family and go hire someone who's fresh out of law school. And this is their first divorce case. We don't want that. We want them to have equal representation. And that's what they're entitled to.

Shawn Leamon: Yeah. So I think a lot of people, I mean, anyone who's not the primary breadwinner in the house, if there is one, probably is at a pretty significant disadvantage, at least from my experience, in terms of having the available money to go and start paying legal fees.

Shawn Leamon: I was just talking to someone yesterday. And they had some money in savings, but basically drained all of it within the first month or so of the process. How does someone know that they'll be a good candidate? How do you figure out whether they should contact you? Kind of gives me the overview, as someone should evaluate kind of this divorce funding, versus using credit cards, or borrowing from family and friends, as you mentioned. How does someone think about that?

Nicole Noonan: Yeah, no. So, we always say, people save for their wedding. You plan for the wedding, the dress, the cake, the caterers, the band. So when it comes time to divorce, no one's sitting there planning for a rainy day divorce. So if you don't have access to your own money, you're going to have to go to friends or family, potentially, or you're going to have to take out credit cards.

Nicole Noonan: Now, that being said, not everyone needs to have an attorney. Not everyone needs full-blown litigation. I always say, it's best to sit down with your spouse, if you can, open up a bottle of wine, have dinner. And say, "Hey, these are my 10 non-negotiables. What are your 10?" And hash it out as much as possible. Because you'd rather send your child to college than send your attorney's child's at college.

Nicole Noonan: But that's not always a possibility. That being said, if you're fighting over ... There's case law, very interesting things. I get it for animals. People want to fight over animals. But fighting over your baseball card collection, or your Nintendo set. Or fighting over something with no value, it's really not worth putting a fight on something like that.

Nicole Noonan: So what we say is, if there's an asset, usually it's a house, and how it's going to be divided. And if you can't work it out, or if there's a custody dispute, and you can't work it out, then you're probably going to need to retain some sort of expert, whether it's an attorney or a mediator. And at that point, it's going to be divided. The money's going to be divided.

Nicole Noonan: And that's when we come in. That's where we can say, "Hey, okay, let's figure out what you're going to be entitled to, and what we can potentially advance you." So you can go in and, unfortunately, sometimes have that fight with the attorneys, and the accountants and whatnot.

Shawn Leamon: So what stage then are people normally coming to you, or do you normally help people? Are these people who are at the beginning stages of the divorce? So still literally may be at the kitchen table, and haven't really started the process yet, in some cases. Or are they generally kind of early or midway through the process? How does someone know the timing, in terms of when to contact you?

Nicole Noonan: Yeah. Shawn, I've been doing this for 15 years, between my own practice, mediation, and for divorce funding. So I get people from all over the country at all stages of the divorce, whether they're looking to say, "Hey, I'm looking to hire an attorney in California. Who would you recommend?" Now, I don't give them one. I give them a list of people.

Nicole Noonan: And then they may come back to us and say, "Hey, you know what? I want to hire Joe something such, and I want your funding. Let's start an application." There are also the people that are on the eve of trial. And I get a call from an attorney saying, "Hey, we thought this was going to be a $10,000 case. Looks like going to cost another $30,000 to take it to trial, because no one's settling at the courthouse steps." That's when we come in. So, really, it depends on the case.

Shawn Leamon: And does someone need to have an attorney as part of this? Or if I'm going through the process representing myself, or more or less by myself, am I a candidate for funding?

Nicole Noonan: Yeah, no. You have to have an attorney. We don't represent any people that are representing themselves. Yeah.

Shawn Leamon: Okay. No, no. Fair enough. So let's say I figure out that there may be an option for me to get some funding. How does the process work?

Nicole Noonan: Try to make it as simple as possible. Because, honestly, money is stressful. Divorce is stressful. So talking about money and divorce is super stressful. So we send an application to the firm, to work with the client and the firm, of what they're looking for in terms of funding, and what the marital asset pool is. And the reason we send it to the firm is it's not their first rodeo, but it's potentially the client's first rodeo.

Nicole Noonan: Documents are sent to us. It goes to our underwriters. We try to make a decision as quickly as possible, again, because it's a stressful time. So usually within three business days, unless we're asking for more documentation. And, of course, the more complex the divorce, the longer it may take. But, traditionally, it's three business days.

Nicole Noonan: Once the client's approved, documents are sent to the client. We do ask the client to review it with an independent counsel. So it does not need to be a matrimonial attorney, cannot be the matrimonial attorney you're using, but it can be any attorney that's practicing within your state. Documents are then sent back to us. And the whole process can be done in as little as two weeks.

Nicole Noonan: Usually, the longest portion of it takes place when we're trying to find counsel to review the documents with you and get them in, especially in light of the time we're living in right now.

Shawn Leamon: And I'm going to make up a very low number, but just for the sake of example, if you were to lend me $100 ... The divorce process could be another month, or it could be another for three years. When do I have to pay that money back?

Nicole Noonan: When you settle. So we get it. Unlike a credit card, we have to worry about monthly payments. We understand. I mean, I've been doing this for a very long time. And the people I work with have been doing this for a very long time. It may take two years to sell a house right now. So you may decide, "I'm going to get 50% of the house. You're going to get 50% of the house." And we'll have to wait until you get the house sold.

Nicole Noonan: Unlike a law firm, where they're not really willing to wait. And if they are, it's also not great. And as an attorney who's done this before, where we would say, "Okay, well, we'll carry this case. And hopefully, at trial, at settlement, we'll get repaid." And it takes another two years, three years, especially during the housing crisis, for us to get repaid. So it's not great business for law firms.

Nicole Noonan: But let them do what they do best, let them represent you. And let us fund you, so you take the pressure off them and the pressure off yourself.

Shawn Leamon: And then is there an interest rate? Or is it a fee? Or how do you kind of charge someone? How do you make money, basically, is what I'm asking? How's this all work?

Nicole Noonan: No, I'd love to do this as a charity. And honestly, that's my next chapter, and my new chapter is hopefully being able to give back. Because I just think that there's such a need for this, for people who don't have a lot of assets, but that really need funding to get them to their new chapter and move on.

Nicole Noonan: But we do. We have a monthly fee. But nothing is due until you get to settlement. So they don't have to stress about that. No.

Shawn Leamon: Got it. And so when do you finally get to a settlement, or there's an order or something, the papers are signed, and as the assets are getting moved from one place to another, is when your repayment?

Nicole Noonan: Exactly.

Shawn Leamon: Got it. How does someone know if they're ... One of the common issues that comes up with a lot of my clients, is people have different levels of their credit, let's just say. Some people have done a great job, over time, maintaining that credit. Others are in between. How do you manage or navigate that process, if I'm kind of looking at my options?

Nicole Noonan: Yeah. So we do do a credit check. That being said, we get it. I mean, we get that not everyone has built up their own credit history, because their spouse was the one who did all the banking, was the main breadwinner, and was the main signee on their credit cards.

Nicole Noonan: We do have other people that have been experiencing job losses or unemployment right now, and they just can't maintain that level of credit. Again, we get it. So it's not something that is our main decision-making standard, for divorce funding.

Shawn Leamon: And you mentioned something important, is oftentimes if you need funding for your legal fees, you may also need funding just to sustain life. Does your funding include or allow for use for fees that are outside of your attorney?

Nicole Noonan: Yeah. No, absolutely. So we understand. First and foremost, we want to make sure you're able to get this divorce done. So we want to make sure that your attorney and your experts are paid. So whether that's a forensic accountant, anyone that you're going to need, an appraiser, someone who you're going to need to get your divorce settled.

Nicole Noonan: But we also fund for living expenses for clients. So we want to make sure that, based on what our assessment is, you're going to need X amount. And if there's anything left over, we'll say, "Okay, if you would like to draw down, we will fund for living expenses as well." Because some people just need to move out. And they need to get a new apartment. Or they need to have money to go back to school, so they can start their new chapter.

Nicole Noonan: Sometimes the most rewarding fundings that we do is people come back to me and say, "Hey, I went back to school. I got a degree. And I'm starting a new job. And I'm on my own two feet. And I'm never again going to let someone maintain a bank account, and know nothing about my finances." So those are really sometimes my favorite fundings that we do.

Shawn Leamon: You're based in New York. Right?

Nicole Noonan: Correct.

Shawn Leamon: Yep. I'm in Texas myself, as many of the listeners know. But we have people from all over the country. Where do you work? Can any state apply, or almost any state?

Nicole Noonan: Yep. We're all over the US. So we're both East Coast, West Coast, Midwest. We're there. And my biggest hurdle is for people to know that we're there,

Shawn Leamon: And what's the best way for someone to contact you?

Nicole Noonan: So we have a website. It's New, N-E-W, Chapter, C-H-A-P-T-E-R, Capital, C-A-P-I-T-A-L, dot com. You can also find us on LinkedIn. We also have an Instagram, @divorcefunding. We're all over. But yes, New Chapter Capital is probably the best. Or they can call us, at 212-404-7807.

Shawn Leamon: Well, Nicole, thank you very much for coming on. I think it's a great option. It's one of the biggest and most common topics that I speak with people about, is trying to figure out what options they may have, in terms of getting money to fund the legal fees. Particularly, if they have a spouse that has been manipulative or controlling, or just kind of limiting access, as you started the conversation with. So I think it's a great product and service that you offer. And thank you very much for coming onto the show.

Nicole Noonan: Thank you so much. Really had a great time.

Jul 26, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

One of the challenges of picking a divorce attorney is finding the right type of attorney or type of personality of an attorney to work with you and for you during the divorce process. There can be a lot of different styles of attorney. Sometimes you want an attorney that is more there towards working towards a resolution and won't run up your bill, but you also want an attorney who is going to advocate for you and fight for you.

One of the things I want to cover in this particular episode is why you want to avoid hiring the most aggressive divorce attorney. You'll see a lot of attorneys out there who claim to be the dog, the bulldog, the fighter. They're going to go all-in and advocate for you and fight for you on every issue and make sure that you're there to win. In fact, if you think about the way that divorce attorneys are represented in movies, oftentimes the attorney's going to be that pit bull aggressive, sports car driving, fancy suit, 35th floor in a downtown office. An attorney that is there to be aggressive and fight.

But I want to give some considerations when it comes to choosing an attorney as to why that might not be the ideal in terms of picking the most aggressive person. And there are four big topics I want to cover in terms of an aggressive attorney. The first is that going to court is expensive. Second is aggressive does not equal respect in the legal community. The third is aggressive doesn't mean effective. And finally, fourth is that an aggressive attorney can be emotionally draining.

So, I'm going to go through these four points. And just keep in mind when you're thinking about your attorney selection, you're thinking about the divorce process, you're thinking about how these processes go, is ultimately you're going to need to get to a resolution. Most people listening want to get to some form of a settlement, and it requires some negotiating ability.

Now, everything being lopsided, it doesn't mean you cave in and give in to the other side, but you want someone who is there to advocate for you, but help you get to a resolution, not just fight for fighting sake. And so, the first point in this is going to court is expensive. If you get an aggressive attorney, you will constantly be fighting absolutely every issue, there'll be a motion for every issue, you'll have lots and lots of legal work that's done. And anything that your spouse or soon to be ex-spouse brings up, whether it's valid or not, is going to be challenged, even when it's not justified to be challenged. And sometimes it is going to ultimately hurt you, not harm you.

And so, when you have overly aggressive attorneys, oftentimes you don't get to a point where there's a resolution and you end up going to trial or having many, many court dates. And the process takes twice as long and is five times more expensive because you're fighting every issue.

The second point is aggressive attorneys aren't always respected both by judges and the legal community. And remember, when I use the word aggressive, I do mean the person who fights for fighting sake. If you know that someone's always going to fight every particular issue, whether it's big or tiny and irrelevant in the overall process of things, that person starts to lose their credibility.

I mean, imagine, and I use an example that's actually a true example, but let's just say you have $300 worth of dishes at home. You know, you have your plates and your bowls and your cups and whatever else, but seven motions later and 14 hours of legal work later, you have now spent $5,000 or more on trying to get those cups and plates going to your house and not your ex-spouse. And that's kind of the thing, where you would have been better off just letting this issue be rather than fighting over every detail attached to it.

And so, when you're fighting over every little issue, there comes a point where people don't value what you say, because everything is an emergency, everything is a big deal. And then the issues that really are big deals get lost in the overall shuffle because you don't have that credibility to say when there are actual emergencies, there are actual issues because everything is.

The third point is that aggressive doesn't necessarily mean assertive or effective. Now, you want, and one of the most common things that almost everyone wants, and I hear all the time, is you want your attorney to fight for you. That is a fair point and a fair statement. You want to feel like your attorney is on your side, advocating on your behalf, standing up for you through the legal system to make sure that what's going on in this divorce process is right and just. And if there's something incorrect that's going on, that that person is going to advocate and make sure that you walk out with a good settlement or the best that's possible given the circumstances.

Now that said, there are ways to do that without causing unnecessary fights on every issue. And the way I make that distinction is there's a difference between being aggressive and being assertive. And so, there are some people who... Many attorneys I like, some of the ones that I recommend to people when appropriate is they are very assertive, they're always in your corner, and they will always advocate on your behalf, but they aren't overly aggressive on how they do it. They treat themselves as being right.

And so, because they know the law well, they know how to negotiate skillfully, they don't have to yell or cause an unnecessary burden. They can speak in a tone like this, they can write factual statements, they can use the law to their advantage in order to help you versus making every issue an explosion or a blow-up.

And then the last point is that an aggressive attorney is just emotionally draining. I've been on the receiving end of and also seen clients who are on the receiving end of overly aggressive attorneys. And what they say and what they receive and what they communicate is just always something. Whether you said something the right way, or you incorrectly typed something, or whatever the case may be, that the receiving end that they're going to say, they make every issue a five-alarm fire when it may just not even be smoke coming out of the kitchen. They pretend like the whole house is burnt down and we got to rebuild it. And it just becomes overly complicated when it doesn't need to be.

In a perfect world, and there isn't a perfect world in divorce oftentimes, this is divorce that we're talking about, but if there were a perfect world in divorce, you would have two reasonable people, two reasonable attorneys, that say, "Hey, our sole objective is to get to a fair settlement so that everyone can move on with their lives at a reasonable cost and in a reasonable timeframe. That's the goal." And when you have someone who's fighting every issue, either on your behalf or if unfortunately, your spouse picks that aggressive attorney, everything just is a constant fight and it's a battle and it's draining and it isn't productive.

And so, you want to make sure that the attorney that you pick, when you're looking for an attorney, knows how to pick his or her battles on your behalf. So some things are worth fighting, other things are not, and a wise attorney will guide you in the right direction.

And so, in the overall big picture, one of my favorite phrases that I've said on the podcast before is you can't see the forest for the trees. Meaning you look at every individual tree but you can't realize that you're in this big forest and you don't necessarily know what the big picture looks like. Well, that's what it is like working with an overly aggressive attorney as you're fighting and looking at every individual tree, but sometimes you just miss the whole big picture as to why you're here, what your objectives are, and what's the best way to get out of this, all things considered. Picking an overly aggressive attorney can really harm you in that regard.

That's it for this episode. I'm going to continue the series on attorneys because it's one of the most important things that you can do as part of the divorce process.

Jun 19, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

In this episode and the next several episodes, I want to discuss divorce attorneys, and family law attorneys, and the details and choices amongst them. And how you can figure out whether or not you have a good attorney, how to find a good attorney to make sure your attorney is fighting for and advocating for you and the complexities of the attorney selection and just relationship management process. I'm a huge fan of divorce attorneys and having them help represent you, but like in all industries, there are people who are really good at their job and some people who, let's just say, politely, may need some improvement. And attorneys are no different. There are some excellent family law attorneys out there who will do a good job for you at a reasonable price. And there are some attorneys out there who will cause a mess of things, and you end up spending tens of thousands of dollars or more. And on top of that, not getting anything done. And I want you to avoid that scenario.

But in this particular episode, I want to focus on, do you need an attorney? And what situations that might exist where you don't need an attorney to help you. And let's just start with the basics. Do you need one? Well, your attorney is going to have, if you work with one, is probably going to have one of the biggest impacts in terms of how this divorce process goes for you. And same is the selection of the attorney of your spouse. A good attorney or good set of attorneys, will keep things moving forward at a reasonable clip people will, of course, have disagreements, this is divorce, but they'll do them civilly and you won't end up spending more money and time and energy than you have to. And if you get a bad attorney, this process is going to be an additional nightmare on top of nightmares. Not only will you lose a lot in your divorce, and when I say lose a lot, I mean, money, time, energy, but the outcome will likely be pretty poor as well.

And so, you need to be very careful about who you choose as an attorney. And so, it's one of the most important things that you can do when it comes to the divorce process. But some people ask me, I get this question all the time is, "Do I need an attorney or can I do it myself?" And I know a lot of people are hesitant to fork over thousands or tens of thousands of dollars to an attorney to help with their issues. And sometimes, I get people who'll say, "Well, my issues are pretty simple. I think I can handle most of this." And a lot of times I'll talk to you and say, "Yeah, you have a pretty good handle on things, but you should still consult an attorney or at least consider it." And there are other times where people don't really need that much legal help because they and their spouse agree on most of the issues.

And so, can they do it themselves? A few things I tell people when it comes to whether or not they need an attorney. The first thing, of course, is that divorce is complicated. There are a lot of details in order to come up with a divorce settlement, a divorce agreement, or ultimately if you are one of the handful of people who has to go to trial. I mean, there's a lot of details involved even in the simplest of situations. And you need to be prepared to have a handle on that and understand all of those complexities. The second thing is, it's very, very easy to make mistakes in the divorce process. The mistakes that people think of, which are, are they getting the right financial deal for them? Did they structure a custody agreement the right way? Are they doing what's within the bounds of the law when they come up with an agreement? Those are common things.

But there are also issues where did you fill out that divorce paperwork the right way? And is the clerk going to reject it? And you have to reject it after 60 days of it sitting there in the office and say, Oh, you didn't fill this out correctly, and therefore you got to redo it and resubmit everything. And there's a lot of just little details that add up when it comes to the divorce process. The third thing is almost obvious, but it can be really hard to see the big picture when you are going through divorce. You're in it. You are in the middle of this situation. This is happening to you, your life, your family, and everything that related to it. And sometimes it's very hard to de-personalize and just make smart decisions. It's very, very tough to make the best decisions for yourself oftentimes in an emotional process when you're going through the middle of it.

And so, having someone like an attorney can provide you guidance from the outside to help you and keep you on the right path and make the right decisions. And then the last point I'm going to bring up is, regret is powerful. I'm going to bring up two more points. One is, regret is powerful. So this is point number four. What you don't want to happen, and one of the most challenging things after this process is over, is looking back and saying, I wish I did X, Y, or Z. And it's something that's very, very common. Because life is complicated. Divorce is complicated. We all get that. And you want to make sure that you're covering your basis for everything that could happen later down the line and just during the process. So you don't have these regrets six months later, a year later, five years later, when you're looking back as to how you handled certain things in this process.

And one of the things, I'm shifting gears slightly as I make this next comment, but one of the things I talk about in my document review appointments all the time is, making sure the what-ifs are covered. And when I think of some of the best attorneys that I know, I mean, there's a lot of factors that make great attorneys, but one of the defining characteristics is they're really, really good at understanding the what-ifs. So, what if you can't sell a house in the agreed timeframe? What if someone doesn't agree or doesn't follow through on this child support agreement? What if the custody schedule needs changing? What if someone gets sick, or a child gets sick, how is that handled? What if there's an issue with the split of the retirement account? And really good attorneys can anticipate, and plan for, and write in documentation, and help you negotiate, what if, scenarios that are very favorable for you and make the longterm process of this divorce smoother.

And then the last point I'm going to bring up, is that you need to protect yourself. There's just a lot of details, as I've said before, in terms of divorce process, and you don't always know where you might be going wrong, where you could get a better deal, or where it's okay to give up a little bit, this is a negotiation. And you want to make sure that the agreement you are coming to is a fair agreement for all parties. It's not about "screwing your spouse." That's not the goal here. The goal is to come up with a solution that both of you can live with for the rest of your lives. It's not going to be fun. It's not necessarily going to be perfect. But the goal is to get to that point and get to that point sooner over later at a reasonable cost. And a good divorce attorney can help you do that.

So, that was all-pro attorney, of course. And I'm going to be getting into lots of different details to think about when it comes to an attorney. But what situations might you not need an attorney, or need very little legal help? And I have just three scenarios. And even in all three scenarios, if I were writing this down, I'd put a little asterisk next to it, to say, yes, but still, you might want to contact an attorney. But three things to consider, the first is that, if both of you have a very clear picture, both of you as spouses understand your assets and your debts. You have a clear understanding of where the money goes, what's there, you agree upon all the values of things, and there's not going to be a lot of disputes about it, but if you know it, that's a good checkmark that you might not need as much legal help.

The second thing is that you and your spouse don't have complex custody issues. If you have any kind of custody issue or it's going to be a discussion or a potential conflict later, get an attorney to work it out for you. Because there are just so many details. I mean, I'm a financial specialist, by no means am I a custody specialist, but from working with enough attorneys and reading enough agreements, I can tell you there are so many details that attorneys know and have worked through over decades, in terms of getting the right custody schedules, and handling all the complexities of raising kids and co-parenting, that they already have planned that oftentimes someone who's just trying to do it themselves doesn't know. But if you don't have custody issues or the kids have grown, maybe you don't need as much legal help.

And then the last point is, if you and your spouse can work out a reasonable settlement, then, by all means, save the money. I said, for all of those points is there's an asterisk. I'm going to get into some options in future episodes as to different ways you can use attorneys without going all in and necessarily writing a 10, 25,000, $50,000 check for each of you to get the appropriate legal help that you need. But one of the things is, is the more that you can agree upon yourself, between you and your spouse, and the less fighting there is, the less help you'll need from an attorney. And so, that's something to think about as you choose. Now, the nature of this podcast and the nature of what I do, unfortunately, I don't get to work with too many people who are in ideal scenarios.

It happens every week, but the vast majority of people are in very complex financial circumstances and are not in full agreement with their spouse, which is why they're listening to this podcast or you contact me and we do a coaching call. But when you can, particularly for the people who are early in the process or haven't filed yet, I always say like, "Look, if you can work out a lot of this stuff in advance, you can minimize the need for attorneys down the line and the cost you're going to have to pay as it goes through this divorce process." So, a lot of things to consider in just a short amount of time. I also have a great section, not to over-promote my book, but in my book, Divorce and Your Money: How to Avoid Costly Divorce Mistakes, there is a ton of information on how to choose an attorney in there, because it's one of the most important things that you can do during your divorce process. And I will be talking about a lot more in future episodes.

May 23, 2020

EP 0219: How to Conserve Cash & Save Money During The Pandemic 

 

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

In this episode, I want to discuss preparing your finances during a recession and how to conserve as much cash and capital you can during this time period. It's not purely a divorce topic, but it has some general financial discussions in here. And there's some things I want you to think about. As I'm recording this, there's something like almost 30 million American adults out of work. The unemployment rate is high. A lot of states have been locked down, and some are slowly starting to reopen, but the economy has fundamentally changed. And just a few months ago, at the beginning of 2020, there was a great economy, and then that changed in the span of about a week or two. And a lot of people have lost jobs or are on unemployment or some combination of those.

And when you're on a budget, regardless of your lifestyle and your income, oftentimes a big decrease like what has happened recently can completely change your lifestyle, your budgeting, your plans, and it can be hard at a certain point if you've exhausted your savings or are getting close to it to figure out ways to conserve some additional money and give yourself added financial flexibility as you try and keep up with the relevant payments that you may have.

And so I want to go through a few different strategies, five specific strategies to consider when it comes to this environment and some ways to improve your financial picture, particularly if your income is down, but your expenses have remained the same or your expenses have even increased given everything that's going on. And so I'm going to go through five things and I'm just going to start them now.

The first is to check and understand your spending. You should have a very good handle on your expenses. If you haven't completed a financial affidavit or statement of net worth, oftentimes they ask you for your monthly expenses. One of the things you should be doing is really understanding what those expenses are, how they look, what can be cut from your expenses. I look at every transaction every month and I go through and I say, "Hey, do all these transactions look good? Where do I spend too much? Could I cut something here or there to make sure that I'm not spending too much?"

And when your budget is tight, you have to realize that even small things add up. I'll use a very simple example, is if you pay $10 a month for Netflix ... I don't know the exact Netflix price at the moment, but let's just say you pay $10 a month for Netflix, and that's $120 a year over five years, that is $600 of spending on Netflix. I always look at those small subscriptions as a five year commitment, and you can realize that $10 a month can add up pretty quickly, much less if you have an expense that's $50 a month or $120 a month or more. And so you need to really think about those expenses and what you may be able to cut.

The second thing is if you have debt of any kind, be it a credit card, student loan, personal loan, mortgage, whatever, you can negotiate with your lenders. Under normal economic environment times, people were not as willing to defer or adjust your payment schedule, but now given the millions of people in very tough situations, and you may be one of them, there are ways to lower your payments in the short-term so that you have some flexibility and in the long-term, you're going to make up for it. But doing and cutting what you can in the short-term can be helpful.

When it comes to a student loan or a credit card or personal loan, you can pay ... Sometimes they'll let you just pay the interest. Maybe you can't pay the principal balance, so if you have ... I'm just going to make up a student loan, for example. Well, let's say you pay $1,000 a month on a student loan. Well, 500 of the $1,000 might be going to interest, and 500 of that $1,000 may be going to the principal balance of that loan. And if you don't have the same amount of income coming in, you can say, "Hey, can I maybe just pay interest only for the next six months, the next 12 months until I can get back on my feet?"

And most lenders are very willing to do that for you because I mean, they want a payment and they don't want you to stop. And it's better for them if you pay some over paying nothing and it's okay ... They'll be happy if you carry a balance for six months, so long as month seven or even month 12, whatever it is, you start paying that as normal again, but if you just stop payments altogether, that actually hurts them quite a bit as well. So people are willing to negotiate and adjust the payment schedules today, so whatever kind of debt you may have all the way to a mortgage or a credit card or anything in between, call the institutions, tell them the situation, and most aren't even requiring a whole ton of proof in the short-term just because the mass volume of people who are affected right now.

Now, a caveat to that is don't just stop paying. You should contact the lenders and tell them what's going on, but if you stop paying, it can hurt you. Now, the only plus side ... I would stop paying is a last resort. The only upside is if you stop paying, it does take a few months before those missed payments show up on your credit report, but it's not suggested. Much better to modify and find a lender or find someone who's willing to work with you than just stop paying because you don't have the capital available.

The third tip is to pause retirement contributions. If you are still working and you have a job, or I know plenty of people who still have jobs, but I have lots of friends and people I know who got salary cuts to keep their job. Some took 30%, 25% salary cuts. I know other people who are on unemployment at the moment, but whatever it is, consider pausing those retirement contributions. If you're contributing 3% or 5% of your salary to retirement, whatever the number is, well, I would lower that to nothing and conserve as much capital as you can in the short-term so you can get through this difficult period.

And conversely is point number four is pause college savings. If you're saving for your kids' colleges, you might want to pause that and keep that cash as well. And when you're in a better financial position, you can start making those contributions again. I imagine just as a general note is particularly for kids who aren't going to college in the next few years, there's going to be some adjustments given the whole virus situation and some hard questions in terms of the cost of college, the value of college and what you're paying for. And so if you're planning to spend 200 or $300,000 on a kid's education, you might need to save or hold off. These are short-term bumps in the road, or at least try and think of them as that, and you can catch back up when you are on your feet, but you shouldn't overstretch in the short-term.

And then finally is consider negotiating or consolidating debt. One of the things I do all the time whenever looking at someone's debt is I like to rank debt by interest rate. Let's say your mortgage is somewhere between 3 and 5%. Well, that's not a very high interest rate, but you could have a credit card that's charging you 21%, or if you're behind, it could be 27% and you can have everything in between. And what you should do is be very organized or very careful about how much you're paying and know how much you're paying an interest for pieces of debt and figure out if there's ways to lower that.

I was just having a conversation with someone the other day and I got an offer in the mail, said, "You are preapproved by Discover," because I use Discover for some of my daily expenses and they said, "You're preapproved for a personal loan at 6.99% and we can get you up to" ... It was a really high amount. And they were like, "We can get you up to $36,000 if you apply within 24 hours." And I was like, "Wow, that's a lot of money." Thankfully, I don't need it to pay anything off, but there are situations where something like that could be helpful.

If you have a credit card and your credit card payment is charging you 18, 19, 20%, and let's say you have $10,000 in credit card debt, you could be paying $2,000 in interest a year. But if you refinance with a personal loan at 7%, well, you would be saving yourself 1,300 bucks in interest on that $10,000. I keep a document actually that I update for myself every month that has each credit card, how much the interest rates are and just making sure I pay off my balances, but if there was a situation where I had a bunch of debt, I would know, "Okay, well, this is the most expensive debt, so I need to pay that off first. This is the cheapest debt, so like a mortgage and I'm only paying 4% and there's some tax benefits, so I'm going to leave that one outstanding and not try and pay that one off." And so organizing your debt and negotiating, figuring out if you should consolidate certain debt, you can quote unquote "refinance debt" by getting a lower interest loan to pay off some high interest debt. These are all considerations, particularly during difficult times.

The five tips to help you conserve some capital are to first just check and understand your spending. That's one of the biggest tips I give everyone going through the divorce process in general, but with the economic situation changing on top of it, understanding your spending and cutting your spending for anything that's unnecessary is the top tip.

The second is negotiate with lenders. Be it a credit card, a student loan, a mortgage, whatever it is, if you can't make the payments or you need to reduce the payments in the short-term, people are willing to work with you. I guarantee it.

The third is pause your retirement contributions in the short-term, and the fourth is pause your college savings contributions if you're making them for a kid. And then finally, the last is consolidate your debt or renegotiate your debt and ... excuse me ... refinance your debt if you have to. And so if you have high interest debt like credit card debt and you get a personal loan at a lower interest rate, it can save you hundreds, if not thousands of dollars over the course of a year or several years just by refinancing certain pieces of debt. And that might be something for you to think about and work on.

 

May 1, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. 

This week, I want to cover a slightly different type of episode. How can you manage stress the instant you are experiencing it?

Oftentimes life can feel overwhelming, and finding ways to manage all of those feelings without shutting down is essential to our well-being.

Here’s a technique that I find helpful and in fact, use frequently to manage stress – it’s very simple.

It’s a deep breathing technique where you count to 10. What do I mean by that? Listen to this latest podcast for more on this guaranteed technique to help you ease stress the minute you feel it.

Mar 31, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

In this episode, I want to do a more timely addition of the Divorce and Your Money episode. As you know, clearly if you're listening to this that there is a big virus going around and businesses are closed. Courts are closed to most extent. And a lot has changed in the span of just a few weeks. And depending upon where you are, the severity has changed quite a bit. But, many life-altering changes, and I wanted to discuss its impact on the divorce process and some things that you may want to consider during the coronavirus epidemic, or pandemic I should say. There are some helpful tips in here and just a hodgepodge of ideas I wanted to go through and some frequently asked questions and thoughts as you consider everything that's going on.

There's a few big things that have happened all at the same time. First, of course, is the virus. The second is the employment situation has changed. As I record this, over 3 million people have reported that they have filed for unemployment, and that number will go up, I'm sure, over the coming weeks. Also, the stock market is down quite a bit, and a lot of people are in much tougher situations than they found themselves just a month ago when ... Well, you still have the divorce part, but at least the economy was good, market was up, and everything else. So I want to give you some things to consider and things that you can do.

The first thing is that across the country and just about every attorney I've talked to in every state I've talked to, court's closed. Now, they're not closed, closed for absolutely everything because the legal system is very important. But for anything that's not essential, the court is likely closed. So what does that mean for you? Well, it means for many things you cannot go get them resolved. So if you have a session in front of a judge that's not immediately urgent or an emergency, it will likely be delayed for several months. And unfortunately, because there are hundreds, if not thousands, of delays happening at the same time, things are going to take a lot longer once we start to reestablish some form of normalcy.

Now, if you have an emergency order for some reason, and you will have to have an attorney to help you with this, at least I recommend one, emergency orders, almost universally, are still going through in courts across the country. But it has to be a true emergency for a court to want to hear it and for you to get a resolution on that particular issue that may be occurring, so there's something to that point.

Now, if you want to resolve your situation, your divorce case, and court is not available at the moment, what are your options? Well, if you are in a position to mediate or negotiate a settlement, every attorney I know is still working. These are all small businesses for the most part. Most family law firms are small businesses. They still are working the same way they would. Now, of course everyone is remote. I've always been remote. So for better, for worse, this hasn't changed a drop of my day-to-day life. But attorneys are working remote, and so you can still work towards negotiating a settlement as if nothing mattered. Now, will you be able to file the final paperwork? Probably not. Or at least it may get delayed until you get the final sign-off, but everything is still possible to make progress in terms of a divorce case or issues you are facing.

Now, if you have to have a court date for something and that would be essential to your process, that's not going to happen anytime soon. But at least in terms of making progress, if you're willing to do that, and your spouse is willing to do that, and the attorneys are willing to do that, you can still resolve. I still have plenty of people that I know that I'm working with who are making progress like they would normally, even though the court itself is closed, and that is an option available to you.

Another thing that's available to you is that if you wanted to do mediation. Now, the traditional mediation when you are in a courtroom is ... Or sorry, a conference room I should say, is not happening, where you get you, your attorney, your spouse, your spouse's attorney, and a neutral mediator in a courtroom is not happening. However, believe it or not, just a few weeks ago, I had done some episodes on virtual mediation services. So it was actually one of the most recent episodes that came out and with Susan Guthrie. She's a virtual mediator. And there are lots of virtual mediation options that are popping up over the last few weeks given the change in circumstances and situations. So if you're in the mediation process, well, a lot of times that's happening via video conference now where it would've happened in person before. So long as everyone agrees to it and agrees to move forward that way, that is possible.

Now, where are people having a lot of extra complications in this process? Well, something that's just obvious is a lot of people are now stuck at home all day with their spouses. That may be you. And that can present a host of issues. It was one thing when you might see your spouse for an hour in the evening and you could get along relatively civilly for that hour in the evening, but now you are together 24/7, 365, or at least that's what it feels like. And whatever was going on is being accelerated, good and bad. But whatever was happening could be worse.

So just my tip during that is, I know everyone's situation is different, but to the extent that you can be civil, or have your own space, or be flexible, please try and do that. Not accelerate things. I've heard an increasing number ... And I don't have data on this point, but I've heard an increasing number of domestic violence issues, of child abuse issues, of lots of additional stressors just given everything going on, and I don't want that to happen to you. So if you have any hope of compassion left to deal with your spouse even though you're in the process of divorce, try and make that work, particularly when you are forced under the same roof.

Another consideration is that custody is a very complicated issue at the moment. A lot of you may be living under different roofs from your spouse and they're going through this process and you've been figuring out different custody arrangements and parenting schedules. Well, if you had a temporary schedule in place or you'd been working on something in an informal basis, I would say try and be a little bit more flexible with what's going on.

Now, there's some weird issues coming up as it comes to custody and parenting time. School is out, or school is being done virtually, or some hybrid of that that may be causing some issues depending upon who is the parent, what resources they have, what set up they have, and that may be causing some issues. So you need to be documenting these issues. I would say first, figure out if you can work them out between the two of you somewhat civilly before getting attorneys involved because it may not happen in the pace that you want it to happen.

The other thing that is happening is sometimes one parent is being more diligent about health mandates than the other parent. So I've heard stories already of where one parent is bringing a bunch of people over to the house with the kid present when they're supposed to be staying at home or avoiding gatherings, etc. And because of that, you might be worried about your kid's health and safety and increasing their increasing probability of catching the virus, or having complications from it, or just being around people who might be spreading the transmission of the virus. Well, that's something that you should not only document, but that is a good time to contact an attorney immediately to see what potential options are.

The smart attorneys that I know that I work closely with, they are already thinking about potential options for this scenario and helping clients. I know some attorneys haven't thought about it one drop. But if you get a good attorney, and I'll be doing some episodes on attorneys in the near future, a good attorney will certainly be able to help you navigate and come up with some creative options during this time when it comes to custody, handoffs, parenting time, etc, given that we are in an unprecedented scenario at the moment.

Another area I want to cover is support, child support, spousal support. Things could be changing for you. Just a month ago when I recorded this or when we were recording episodes, and if you're just thinking about life a month ago at the end of February, we had the lowest unemployment rate ever. And a month later passes and we now have the highest unemployment number, at least people out of a job, ever recorded by a big magnitude all in the span of about 30 or 45 days. What that means is that you or your spouse could very well be in a scenario where income-based support, it could be child support, could be spousal support, could be temporary, could be whatever, all of a sudden that is no longer financially feasible for you.

Now, there's a lot of things going on government-wise, economy-wise, just a lot of different moving parts. And so the question is, what happens with those orders that may no longer be based on financial realities? Well, there's a lot of things to think of. Also, some people were negotiating. I've talked to several people in the last week or two who were in the process of negotiating settlements and those settlements, all of a sudden, we had to change the strategy due to what was on the table and all of a sudden potentials for job losses or people who were out of the workforce, etc. That all of a sudden changed our strategy from a financial perspective in terms of what the best options were.

Here's the point, is that if you have an existing order, you should continue the status quo of that order. So if you're receiving payments, you should hopefully continue receiving that same amount that has been agreed to. If you're the one making payments, you should continue to make those payments that have been agreed to for the foreseeable future, assuming that they agreed to by the court in some form or fashion. If your job is the same, too ... I know some people who haven't been affected yet by the job issue. If your job's the same, your salary's the same, definitely don't do anything. But if you are in a position where someone's lost a job or on reduced hours, at least for the short term that plan should be to keep going under the current amount.

Now, there are things that you can do, particularly if you're the payer of support, is you can file to have that support reduced, especially given a job loss or unemployment for reduction in hours. And that has to go through the court process so it may take a few months, in which case the default recommendation is to keep things going for a few months. Then when that process works itself out, then you would pay the reduced amount. And if you're the person receiving support, I would also assume that the person who's the payer, be it spousal or child support, is going to be asking or looking for reduction in the near future and so you need to plan accordingly.

But I would say this, I would be very cautious. Now, I know some people are in a situation where they have to conserve every dollar that they can, otherwise they're not going to be able to make the mortgage payment, or the rent payment, or eat over the coming months. And if that's what you have to do, that's what you have to do. But to the extent that you can continue to make some form of spousal support or child support payment, particularly in the short term, you should do that, especially if it is ordered. But, everyone needs to be aware that things will likely be changing and people will have less in terms of money in the near future.

The other thing to remember is this is an unprecedented situation. It just is. I was talking to someone who was getting ... Well, everyone I talked to just about is going through the divorce process, and we were talking about what should you really be focused on during this process. And I said, "Hey, look, there's a lot that's going to be happening over the coming weeks and months. We don't know how it's going to play out. The economy's down. A lot of things are down. But remember this, is basically all of finances, even in a new reality, are you need to have your income be more than your expenses. Simple as that. Your income more your expenses, and then you need to have money saved for a rainy day." Well, now is definitely a rainy day.

I talk to lots of people in the past. And if you've listened to this podcast, I always say try and hold on to your cash. I'm very much biased, even in the best of times, that you need to hold onto your cash and stay as liquid as you can whenever you have that option because you never know when a rainy day is coming. And unfortunately right now is that rainy day.

So what you need to be thinking about is your lifestyle. You might need to be making adjustments in terms of what's relevant, what's not, and conserve every dollar you can. I would avoid paying down debt at the moment. I would hold on to your cash. You can refinance debt, but hold on to as much cash as you can in the immediate term because we don't know how bad things are going to get.

It depends on where you are in the country. I travel a lot so I get to ... so I know people all over and I'm checking in. All over the world as well. I mean, I have friends in over 80 countries, and it's a different issue depending upon where you are in the country and in the world. And if you're in the East Coast, or West Coast, or middle of the country, it doesn't really matter. Things are happening at different rates and different paces. The point is you need to be prepared for everything that is happening and even if you have to start making some immediate cuts. You should be doing those and thinking about what is going on in the near future.

But, there's a lot of things that are happening. I'll keep you updated as I have new information and I hear information from attorneys. I know some good attorneys who are putting out some information, particularly in regards to custody because that's the biggest thing that's happening right now. But, we don't know what the extent of things is going to be. We do know the world is moving online very rapidly and trying to keep up with as much as we can given the changing circumstances, but prepare for this to go on for several months.

And things are going to be delayed. It's going to take a long time to catch back up when the time comes, and so you need to be making those financial moves and preparations now so that you're not caught flat-footed later when some of these scenarios that we might have been thinking about hypothetically are actually here and are real and could cause some very substantial stress in your life.

Mar 1, 2020

 

In this episode, we have an interview with Susan Guthrie - Family Law Attorney, Mediator, and Host of Divorce & Beyond Podcast. Learn more about Susan here: https://divorceinabetterway.com/. Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

Shawn:

In the beginning of the process, as you're doing your research, one of the most important things you can do is figure out what are your options and what are the best ways to proceed during the divorce process. And know that the traditional method of divorce litigation is not the only method that exists when it comes to the divorce process, and you may have options. There's mediation, there's collaborative divorce. But in this particular episode, I want to discuss mediation, and to do that, I'm bringing in a great guest.

Shawn:

Her name is Susan Guthrie. She is a family law attorney with over 30 years of experience. And she's going to give us an overview of some of the key things about mediation to think about. She'll describe the process really well in this episode. And the other thing that's interesting about mediation is that there's the possibility for online mediation. And so, there may be some advantages to that as well. So, I hope you enjoy the interview with Susan Guthrie and also be sure to check out her podcast. She has a really good podcast that's called Divorce and Beyond. So, without further ado, here's my interview with Susan.

Shawn:

Today on the show I have with me Susan Guthrie. Susan is a family law attorney, mediator, and a podcast host of her own. Susan, welcome to the show.

Susan:

Thank you, Shawn. I'm so pleased to be here. Thank you for having me.

Shawn:

Susan, let's start with ... actually, I just want to start with the podcast so other people can listen to it. It's great. I recently did an interview on it. Why don't you tell us about your podcast?

Susan:

Thank you. Yes, and by the way, your episode is doing very, very well. People are always interested in Divorce and Their Money, it's called, my podcast is, Divorce and Beyond. It's really focused on, I've been a divorce attorney and a mediator for 30 years, so I bring that insider knowledge to the divorce process, and bring experts on to help with that, such as yourself. But I also am very much focused on the beyond, because divorce is really a finite time in your life or I certainly hope that it is, and you have a future ahead. So, many of our episodes are focused on preparing for the beyond, preparing for your future.

Shawn:

Great, and I encourage everyone to listen to it. There's lots of great episodes on there and you bring a great collection of interview guests on there as well. That's really interesting.

Susan:

Oh, thank you.

Shawn:

So, why don't you tell us a little bit about your background. I know you said you practiced for 30 years, but why don't you give us your credentials so to speak? So, we all understand who we're listening to.

Susan:

I have practiced as a family law attorney and still do to some degree for 30 years. My original State of practice was Connecticut, and I was located there in Fairfield County for 25 years or so, with a pretty traditional law practice. Then, branched out on my own and started moving around the country. I moved to California first, so I'm also licensed to practice law there. But I also segued my practice over to mediation, and in fact, that's all from a divorce perspective that I do in the process of helping couples negotiate and settle their divorce issues. I now live in Chicago.

Susan:

My practice is now entirely online, and I help people both through online divorce mediation services as well as legal coaching services around the world because I can do it online. I feel very lucky that I have been a divorce attorney and operating at a fairly high level. I dealt with a lot of high conflict and high net worth cases during my litigation practice. So, as you mentioned, I have access to a large number of really excellent experts because I've worked with them over the years in my practice, and I love bringing that wealth of knowledge and really that insider side of things to my listeners.

Shawn:

Yeah, I think that's great. You worked with a lot of high conflict people and now you do a lot of mediation work. Why did you make that shift?

Susan:

Yeah. So, it was sort of two fold. But really what it boiled down to, and for anyone who's seen the movie that's out right now, Marriage Story, you will understand I think what I'm talking about. But I got involved in divorce litigation when I first got out of law school, because frankly 30 years ago, that's really all that was out there. The litigation process is very adversarial. It is set up on a party A versus party B platform like any other lawsuit. Unfortunately, when you're talking about restructuring families, that is not a very good model for success.

Susan:

Unfortunately, that process actually drives people further apart, and then, when they find themselves post-divorce needing to co-parent or communicate, the animosity and the adversity that was brought up during the divorce and exacerbated during the litigation process really only makes it worse. It sets up an ongoing conflict cycle. So, mediation is an opportunity for parties to sit down, couples to sit down, and work together in a more cooperative fashion to communicate and restructure their family in a way that works best for all of them.

Susan:

It's not based on that win lose model, and so now having worked in both formats, the reason I only do mediation at this point is because the results for clients are so much better.

Shawn:

Let's start by defining what is mediation versus litigation. Can you just give us an overview of what that means, what that process looks like, how it differs?

Susan:

Sure, and actually that's a great place to start because there is a great deal of misunderstanding at times for people when it comes to mediation. I always hear it called the kinder, gentler way to divorce, or the kumbaya method of divorce. I will tell you, divorce mediation, like any process that you would go through to negotiate or resolve the issues of a divorce, it takes effort. It has its moments where it's not an easy process, but divorce mediation is based upon a principle of the two parties sitting down with a neutral professional, that could be an attorney like myself. It could be a financial professional.

Susan:

I know a lot of professionals who are financial advisors, who also are mediators, or therapists, or other professionals, but they sit down with a trained professional who's there to help them identify the issues that they need to resolve in the divorce, to give them an understanding of the law, and context, and nuance around those issues. Then, really importantly, to support both of them in having the difficult conversations that need to be had on how those issues are going to be resolved, with an eye to identifying what works best for all of them. Again, we're always in mediation looking for the third solution.

Susan:

We're not looking for the win for one side and a loss for the other. We're looking for that third solution that allows everyone to get as much of what they want on a needs base or interest based perspective, so that everyone walks away with a decision and with agreements that incorporate as much as possible what they've chosen that they can and cannot live with.

Shawn:

Let's give a concrete example of that, and I'm just thinking of, I want to just use a very simple case. Let's just say we have a house, a couple of retirement accounts, a couple of cars. How would I know when to use mediation and what would that look like for me versus going the traditional route and what would that mediation process look like start to finish?

Susan:

The two processes, they look similar because any method that you're going to use to resolve your divorce is going to sort of go through the same stages. You're going to have the quantifying or the pulling together of information stage. In litigation, we call that discovery. In mediation, we call it information gathering phase, but then you're going to discuss the issues. Then, you're going to come to agreement on the issues in 95% of the cases. So, the difference with mediation is, in litigation everything is done on a compulsory manner and fashion. Motions are filed, requests for orders are made, requests for production are made.

Susan:

Everything has time limits, and rules, and things are done because you are under court orders to do them. The difference is, in mediation, everything is done by agreement, including the fact that the parties are in mediation at all. Mediation is 100% voluntary as opposed to litigation, which people can be dragged kicking and screaming into, or if they ignore it, it's going to happen without them. So, the mediation process itself, just as a litigation case would start, does start with the information gathering. But it's not done in that fashion where you exchange compulsory requests for information.

Susan:

We sit down with your mediator, with the two clients, and compile all of the necessary information by agreement that we're going to do that as a part of the transparency of the process. That has a lot of different effects. The biggest one being it takes much less time to pull together all the information because we are talking about what everyone needs to see, wants to see, and agreeing to pull it together. It's also much less expensive because the parties are not utilizing legal counsel, filing of motions, all of which that they pay their attorneys for.

Susan:

It's usually much more successful, because nobody will drag their feet usually in the same fashion because, again, they've agreed that they're coming to the table to work through the process. So, in many ways, I've seen litigation cases where we have literally spent years, you mentioned a simple case where there's a house and some accounts, et cetera, that could take a relatively short period of time with that type of state to value things, because you have either written statements or you can get an appraisal. But when you get into some more complicated cases, or where there's a family owned business, or a cash business, or something of that nature, I've had cases drag out forever in the discovery process because it's so hard to get the information exchange, and that really just doesn't happen in the mediation setting.

Shawn:

You covered a lot of things that I have some kind of followup questions on. One of them that comes up, I hear every week or so is, oftentimes one party may not be as forthcoming as they should be during mediation. How does one handle that?

Susan:

So, that happens. Definitely it happens in litigation as well. So, the first thing to remember is, because mediation is by agreement, both of the parties have a reason or reasons why they have agreed to come to the negotiation table in mediation. Mediation tends to move much more quickly than litigation, so maybe time is an issue for them. It's usually infinitely less expensive. Maybe money is an issue for them. Maybe they feel it's a better forum for working through the issues. Whatever their motivations are, that brought them to the table, are the motivations that will also compel people to be forthcoming with the information that is required.

Susan:

Because what happens is if people do not come forth with requested information, the mediation process comes to a halt. Because if you are sitting at a table and one party does not feel they have the information that they need in order to make the decisions or the agreements that need to be made, the process can't move forward. You are putting people in the position, by making that choice not to be forthcoming, you're putting the other side in the position of having to take you into litigation.

Susan:

Having to compel your discovery as we were talking about earlier with the motions, and the depositions, and all of that. So, usually, it takes the mediator reminding the parties why they're there, that this is a voluntary process. They agreed to be involved in it, and failure to comply with reasonable requests for information are just by necessity going to bring the process to a conclusion.

Shawn:

I think that makes sense. I want to ask some technical questions about mediation, or just some basic questions is, you're a mediator and you're also an attorney, do the parties also have their own attorneys? How does that work? Who's actually in these mediation sessions?

Susan:

The majority of my mediation sessions are just the two people who are going through the process. That is not to say that they don't have outside consulting professionals, and I am very much a believer in the team approach to divorce. I think that everyone usually will need some sort of support as they go through the mediation or divorce process, whatever they're going through. That can include a consulting attorney, because as you point out, I am an attorney, but when I am operating as a mediator, I am not representing either of the parties.

Susan:

That would be an ethical breach. You can't, as an attorney, represent both sides of an equation. There's a conflict of interest there. So, your mediator, even if they're an attorney, is there as a neutral professional to support both parties. But often, people will need some outside legal advice, and it can be very, very helpful to the mediation process for them to have a good professional that they can go to. Other professionals are people like you CDFAs. I highly recommend using a certified divorce financial analyst, or a financial support team, especially in those cases.

Susan:

You mentioned that there are often one side of an equation in a divorce where they're not forthcoming with information. There's another paradigm that comes up all the time where we have one party who's pretty financially savvy and the other one who is not, and so, they feel very disempowered in making decisions. So, getting them some support by getting them a financial advisor or getting them a financial planner analyst, can be very helpful to the mediation process because it helps to support them and educate them as they go through. Another person that's often brought in is a therapist.

Susan:

If we have parenting issues, and maybe we have an issue with special needs for a child or developmental issues around the child's upbringing. So, I very much believe in the team approach to divorce, the divorce process as a whole, and certainly in mediation.

Shawn:

If I'm thinking about the mediation process, sometimes people think, is it just one meeting in an afternoon, is it multiple meetings? How does that work?

Susan:

Generally, it's a series of meetings. My mediations tend to be scheduled for two hours at a time, and that is because in two hours we usually can make some headway, start talking about real issues, and making proposals, and making agreements. But beyond two hours, it's an emotional context, right? You're talking about your kids, you're talking about your money, you're talking about separating all those things. So, the emotional content is very fatiguing. You are either in the same room, or if you are with me mediating, you're in the same Zoom meeting, and two hours tends to be where people sort of burn out.

Susan:

And what I don't want is my clients making decisions out of fatigue, or just saying because they're just so tired and they want to move on saying, "Fine, I'll do that." Because what ends up happening is they then leave the mediation, that session, come back to the next one having thought about it and they will backtrack. And that's harmful to the process only because now we have trust issues, "Well, you said you would do it. I relied upon that and now you're backtracking." So, it's better to do it in bite sized chunks that you can process, take your time, and move through it.

Susan:

Usually, it depends on the couple. It's usually a few three, two-hour sessions. It can be certainly more than that. I've had cases move faster. There are other types of mediations, so another type of mediation for family cases that people will be acquainted with is a case that's been in the litigation process all along. They're usually close to the courtroom door for trial, and they will, as what I call last ditch effort, resort, to sitting with a mediator for sometimes a full day session to try and resolve those last outstanding issues.

Susan:

In those cases, usually the attorneys who have been representing the clients all along are involved, and those usually tend to be one marathon type, long day type session. But for people who start in mediation, their divorce process from the start is in mediation, usually two, maybe three-hour sessions and a few of those, but infinitely faster. I will tell you, most of my divorce mediations are completed before the sixth month. California has a six-month waiting period. Connecticut has a 90-day waiting period.

Susan:

Those are my States of licensure, and we're definitely usually done by the sixth month mark in California, three months ... It just depends on the complications of the issues.

Shawn:

That's good to know, and if I'm sitting at home listening to this or wherever I may be listening to this, how do I know whether I can go down the mediation route? What kind of things should I be thinking about to say and maybe even conversations I might need to have with my spouse in terms of, "This is an approach that may work for us."

Susan:

That's another great question, because that's one of my key things I want people to know, that your best approach to divorce is to try mediation in most cases from the beginning. Because if it doesn't work, you always have litigation to fall back on. That will always be there for you. But knowing that it's a possibility at the beginning and giving it a try for all of the reasons of all of the benefits that it has, is something that I love for people to know from the very beginning. So, some of the things to be thinking about are, do you have the ability to self advocate?

Susan:

And if you don't feel that you do, can you find support to help you with that? There are a lot of amazing divorce coaches, legal coaches like myself. I work with a number of people going through mediation, helping them to strategize what they're looking for. I was just listening to one of your podcast episodes and you mentioned the question, what do you want? That's a huge question when you go into a mediation. You don't go into any process of divorce without knowing where you want to go, or the process is going to happen to you rather than you being an active participant in it.

Susan:

But that's really the question, is do you have the wherewithal to sit down and do the work that needs to be done with the help of your mediator? And to bring your spouse to the table, people ask me all the time, "Well, I'd love to do mediation. It's less expensive, it's less stressful, it's less time consuming, it's less adversarial. All of those things, it's better. It helps us create communication pathways for our kids so that we can co-parent in the future." All of those are benefits and those are actually the things that help you to talk to your spouse about trying mediation.

Susan:

Because the thing I always tell people is, the one thing that we do know after having been married to someone is usually what their interests are. And usually, there's one or more benefit of mediation that will appeal to them. Often, it's the cost savings. You and I both know the average divorce in the United States is in the 20s of thousands of dollars per person these days to litigate. Many people, even if they have that kind of money laying around, don't want to spend that kind of money on getting divorce. By the way, it can go much, much higher than that. Mediation is much less expensive.

Susan:

It tends to be much less time consuming, less stressful. You have much more control over the process. So, knowing whatever you know about your spouse and what would appeal to them, that is usually the best way to approach them and ask them to consider the process.

Shawn:

That make sense, and can someone come to you for select issues in a divorce? So, let's just say there's 10 things to figure out and they agree upon seven of them, but there's three issues that they still haven't quite resolved yet. Would mediation work for that?

Susan:

Oh, absolutely. In fact, I often work with couples who maybe have worked out the financial side, but they need help with the parenting plan or vice versa. They know what they want to do parenting wise, but there are certain issues on the side of the finances that they just can't quite resolve. So, you can bring limited issues to mediation. Any sort of any issue can be mediated. Many people who have gone through divorce but then after the divorce there's been a change of circumstances. Someone loses their job, someone gets a big raise, something with the kids comes up and you need to change your parenting plan because children aren't static.

Susan:

I often mediate that post-dissolution type matter as well. The only thing I would caution, and I just don't want people, because attorneys and mediators are accused often of ramping up, making problems in a divorce that didn't need to be there. What happens sometimes, when a couple comes to a mediator or an attorney to work out issues and they think they've resolved a bunch of them, but they have a couple that still need to be resolved. The thing with a divorce settlement is it's a puzzle. It's not separate blocks of issues.

Susan:

Everything works together, right? It's a family. So, the money, and the kids, and the house, and all of those things work together. So, sometimes the outstanding issues will have an impact on those issues that they feel they have resolved. So, some of those issues may need to be reworked or looked at again if they don't fit into the overall puzzle context. But, again, that's where mediation is great because you can sit down and talk about, in the broad picture, why maybe perhaps something that they thought they wanted to do isn't going to work in light of another aspect of their settlement that they also would like to accomplish.

Shawn:

Yeah, that's a good point, is that sometimes it's very hard to isolate particular issues in a divorce, because if you pull on one thing or adjust one thing, it can affect every other item.

Susan:

Exactly.

Shawn:

It may work in certain cases, but you have to be open to shifting or changing other parts of the big picture when you do that.

Susan:

Absolutely. I always tell my clients in mediation, I work off a written agenda. I find people like the visual of an agenda that outlines all of their issues, and then I take notes on it for them as we're going along. I always tell them, although an agenda is a linear thing and item one, item two, item three, and even if we're going to move through it in that order, it doesn't mean that we have to resolve issue one in order to move on to issue two. Often, it's, let's discuss issue one, come up with some possibilities, and then table issue one and work on the next issues because in the end, all of them need to work together.

Susan:

As an example, someone often wants to keep the marital residence, and both sides may be open to that and may have reasons why they want that to happen. But until you get into the financial side, with support and asset distribution and debt distribution, you may not know if that person can actually afford to maintain the property. So, that's a very common question that will come up, where we have to sort of resolve the support issues and the financial issues in order to know if what they want to do with the house is actually going to work.

Shawn:

That's great. One last question, which is, at least as it pertains to the mediation, is you do online mediation work. I know you've done in person, of course, work as well. How do you find the difference between just the setting, be it a video call versus everyone's huddled in a conference room kind of atmosphere? Can you just kind of give us your pros, cons, thoughts about that?

Susan:

Yeah. It's interesting because I do now have an entirely online practice, and I have to say, especially for divorce mediation, I've actually found that the parties having the ability to have a little bit of space, because they do not need to be in the same physical location in order to mediate online, that's actually been a benefit for most of my clients. That they feel more able to emotionally deal with the conversations that need to be had as opposed to sitting just a few feet away from each other in the same room.

Susan:

I've had many people, when I had a brick and mortar practice, who would come and I would meet with a couple for a consult to just decide if they wanted to mediate. And in the end, it would come down to one of them saying, "I loved all the benefits, but I just emotionally don't feel like I can sit in the same room with my spouse and do this at this moment in time." Because as we know, divorce, yes it is a financial transaction, we're talking about money, et cetera. But in reality, it is an emotional transaction as well.

Susan:

And so, the video context gives people a little more space, but still you have the ability to see the other person because 85% of our communication is visual, and most of that is our facial expressions and voice. What we say and how we say it, our voice inflections. So, much of that is still readily available in the online context. So, for me, in my experiences, it's actually been a benefit to the mediation process, and most clients are thrilled to be online. They don't have to sit in traffic. They don't have to get a babysitter. They don't have to leave work early.

Susan:

I know you work online quite a bit and so you know some of those benefits. It has translated very well to the mediation practice. In fact, I train other mediators in how to conduct their mediations online, because this is such a quickly growing aspect of the mediation practice. My colleagues are fascinated by it.

Shawn:

Yeah, and I think that's one of the hardest things is when you are getting divorced, having to be three feet away from the person you're getting divorced from, staring right at them the whole time. It can make the emotional side of things amplify them quite a bit, just being in the same room. They're funny in retrospect even from the client's perspective, but a lot of times where someone yells, stomps out, runs out of the room, just can't stand being in person with that person they're getting divorced from.

Shawn:

It's divorce and it's not a pleasant process to begin with. This isn't a civil suit business dispute. So, I think there are a lot of advantages to the online perspective for people who might not have considered it as well, just from that.

Susan:

Yeah, the ability to, in any way that we can, keep the emotional content a little at a lower level is beneficial to the process. Because the minute people start making decisions from that emotional place, from anger, from fear, from hurt, whatever, divorce unfortunately doesn't embody usually a lot of positive emotions. It's usually a lot of negative emotional content, and the higher that level, the harder it is for people to make rational reason decisions. As you know, these are decisions that are going to live with you, and your family, and your children for years to come.

Susan:

So, you want to make them from the best emotional place possible, and I'm not saying that it's always easy. But another thing that I do is I incorporate mindfulness techniques into my mediation practice and encourage my clients to have a mindfulness practice if they're open to that, only because it does help. When the emotions start to rise up, to be able to take that step back and find some space. It's really important to be able to think clearly, and that's another reason, going back to where I said the sessions are usually only about two hours long.

Susan:

I want people making decisions in a space where they feel that those decisions were good ones, or at least made from a reasonable place and that they can live with them.

Shawn:

That's excellent and thank you for coming on and explaining the basics and the essential parts of mediation. It's not a subject that I talk about too often on my podcast. Why don't you give us the best way to contact you and to learn more? Hopefully, have people potentially work with you in the future if mediation or other services are right for them.

Susan:

Absolutely. Pretty much everything about me can be found on my website, which is divorceinabetterway.com. My email is susan@divorceinabetterway.com. I encourage anyone who's going through divorce to take a look at the website. I have a lot of curated resources, most of them free, or special discounts that guests on my podcast have offered. I have your book going up on my website shortly, so that people can find it who have listened to the podcast, or go there. But I like to bring as much information to people because that is so empowering in the divorce process.

Susan:

Get your education, get your information. So, divorceinabetterway.com, and then also the podcast has its own website which can be found through Divorce in a Better Way, or at divorceandbeyondpod.com.

Shawn:

And outside of mediation you were telling me you do a few other services. Just so people can know, can you describe those?

Susan:

Yeah, so one of my biggest areas of practice at the moment is legal coaching, which is a little bit different than divorce coaching, because what I'm doing is getting involved in cases. Usually, they're either high conflict cases, where someone is dealing with a high conflict ex that can be a narcissist, a borderline personality disordered person, or just someone who is very difficult to deal with, or high net worth cases. I'm helping the client to learn to manage those relationships, manage the communication so that they can have as much control over their lives as possible.

Susan:

I help with strategizing, with negotiation strategies. I've been a divorce attorney for 30 years. I negotiate every day of my life. I have to stop myself from doing it in the grocery line because it's so second nature for me. But your average person, unless they have negotiation in their business life, that's not a normal, that's not something that many people are comfortable with. So, I work with just a lot of clients on how to identify what they want and then how to strategize and negotiate to get that in the divorce process. I work with people all around the world in that context. I have clients across this country, Australia, Europe, Canada, all over.

Shawn:

Well, Susan, thank you very much for coming on the show. I really enjoyed the conversation and I hope the listeners will, too.

Susan:

Well, and thank you so much for having me, and thank you for coming on my show. Again, I loved that episode and so do my listeners. So, thank you.

Shawn:

Now, before you go, I want to make sure you get some really important information. I'm going to tell you about a few things that maybe of interest to you. First as a favor, is if you could leave a review, if you're on the iTunes store, leave a review on iTunes, or if you search Divorce and Your Money on a website called Trustpilot or on Google, you can leave a review there. It's quick, it's anonymous. It only takes a few seconds and I really, really appreciate your feedback. I have lots of reviews on iTunes and on Trustpilot, and I appreciate hearing your stories.

Shawn:

Also, on divorceandyourmoney.com, you can get lots of great information. Of course, you can book a 30-minute strategy session directly with me. There's two types of strategy calls you can book, just a normal strategy session, where we discuss the questions that are most pressing to you regardless of where you are in the divorce process, be at the beginning, towards the end, or in the middle. It doesn't really matter. There's lots of great information we can cover during that strategy call. Also, we have a document review call.

Shawn:

It's been one of the biggest things that we've done over the past year, which is you can send me your documents, be it your financial affidavit, a settlement agreement, or other documents that you would like for me to review. Then, I review those in advance of the call and then we get to discuss them in-depth as part of a strategy session and get specific answers to some of the specific documents and things that you are considering. Also, for those who need ongoing support, we do have a few options for ongoing support, but regardless, it all starts with a coaching call that you can book at divorceandyourmoney.com.

Shawn:

Don't forget to also get a copy of my new book. It's called Divorce and Your Money: How to Avoid Costly Divorce Mistakes. It's available on my website, or also on Amazon. You just look me up and make sure you get the new edition. It is filled with excellent information regarding the divorce process, and I know that you will find it helpful. Once you've read the book, be sure to leave a review. That really helps me. I appreciate your feedback and it also helps other people as they try and find this information. And finally, last but not least by any means is on the store at divorceandyourmoney.com, if you click on the store button, you can get access to the full archive of podcast episodes.

Shawn:

There's over 200 episodes, and what's great about the store link is that the episodes are organized in neat buckets, and they're organized by topic. So, it's very easy to follow along with the information, and it is easy to pick out the key topics that matter most to you. You can get all of those podcast episodes in the store. Thank you so much for listening. I'm your host, Shawn Leamon, MBA and Certified Divorce Financial Analyst. Take care.

 

 

Feb 17, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

In this episode, we're continuing the series on the top 10 divorce tips, and I want to go through tips number seven through 10. In the previous two episodes, I went through one through six, and now we're going to go through the last four.

Tip number seven is keep your spouse from spying on you. What do I mean by this? Well, one of the things that's really important, whether you're planning for divorce or going through divorce is, or even after divorce, is making sure that your private information remains private. And that means you don't necessarily want your spouse to have access to your emails or your computer or all the sensitive communications that are going on during the divorce process and afterwards.

And you want to start setting up your own independent online accounts so that you can keep that information private. And I don't just mean online accounts, I also mean physical accounts as well.

So specifically is, I'll start with some electronic things. So you're going to want a different phone number. It's not good when you see X, Y, Z Divorce Firm popping up on your phone and your phone bill. So if you can set up or even better yet, get a new phone just for divorce communications, that's a good idea.

And the nice thing is, is that a smartphone these days is pretty cheap on Amazon or if you go into the store. And so you can get a phone for $25, $30.00 a month, and that allows you a new phone number, new way to communicate and a very private line for all of the various private things that go on during the divorce process.

I encourage you to consider getting a new computer. It's worth it to get a new tablet or new computer. Also, not a very large investment these days, so you can surf, do all of the relative online things with privacy and not be tracked by your spouse.

Definitely get a new email address. If you use AOL, go to Gmail. If you use Gmail, go to Yahoo. If you use Yahoo, go to a different service. One of the things that happens all the time is your spouse may have access to your emails. And something that happens all the time with the phone is that your phone's linked to an email account, so when you take a picture of a document or something, all of a sudden that picture shows up on all of your devices that your spouse is going to login to their pictures, and they'll be saying, "Oh, new picture added." You'll have a picture of a retainer agreement or picture of a financial document or a picture of something else. And if you don't have all of these things separated, you're going to unintentionally be providing your spouse access to everything.

So non-online things is get your own bank account. If you are at a bank, like Bank of America, get an account at a different bank. Go to Chase, go to Citi Bank, go to whatever your local bank is, a bank that you don't traditionally use. Because all too often, and I this every week, is where a bank teller starts sharing information about accounts they shouldn't be sharing information on, because you're still banking with your soon to be ex-spouse.

Get a new physical address. It's very easy to set up a P.O. Box for mailing things or one of those mailboxes at a UPS store, very cheap, very easy to do. And you don't have to keep all of these things permanently, but during the divorce process, very well worth doing.

And also monitor your credit report, just to make sure that there's no new accounts being added or new cards being taken out, just making sure that you understand that you have all of the right information. So that's tip number seven.

Tip number eight is avoid court, if you can. I talked about this recently in an interview that I'll be sharing with you in a few episodes. But one of the things that you should try and avoid is don't think that judges have your best interests in mind. Don't think that you're going to have lots of time in court. Don't think that it's the ideal place to get things resolved.

If you're in a position where you can avoid going to court, going to trial, spending tons and tons of money, fighting it out till the bitter end, and also ending up with an even worse result, I would suggest you do that.

Sometimes court's inevitable, and I talk about in my new book, some things about court that you should keep up with. But if any way that you can stay out of court and come to resolutions on issues, you will save time, money, emotional energy, and a lot of other from avoiding the court process.

Tip number nine is stay involved in your divorce process. This is an important tip, because a lot of times you'll have this opinion, you would have spent hours searching for the best lawyer getting recommendations. You hire someone, maybe you hire the most expensive firm in town, or you hire the most aggressive person, or you hire whatever and you say, "All right, my lawyers got this." Well that's not true.

I say this all the time is, "You're the CEO of your divorce process, and you have to make sure that you stay involved with every step along the way." Now sometimes staying involved means checking in. You should be hearing from your various people that are helping you through the divorce process, every couple weeks to make sure you know your case is on track, and you're not missing anything. Hopefully, they're checking in with you, but if you don't hear from them, all of us are busy people, definitely check-in. Make sure that things are going the way that you expect them to.

You have to be the project manager of your divorce, the CEO of your divorce, is make sure that all the things that are supposed to happen are happening. And sometimes things fall through the cracks, but if it does, it's your job to make sure that you put them on track and continue to stay on track.

And the last point in the top 10 is get an experienced divorce attorney. I'll be talking about this particular one in future episodes. Of course, I've talked about it on previous podcast episodes, but those are very important. It's very important to have an attorney help you, even if it's just for parts of the process. It may not be the whole thing.

So in summary, I'm just going to give you a quick recap of all 10 tips, and these are the must follow tips as you go through the divorce process.

One is, face reality head on. Two is, know you got this. Three is get organized, one of my favorite tips, and one of the most important ones. Four is, keep the big picture in mind. Number five is understand your expenses, also another favorite tip of mine. Number six is to create a marital history. Number seven is keep your spouse from spying from you. Number eight is avoid court if you can. Nine is make sure you stay involved in your divorce process. And ten is get an experienced attorney.

Thank you so much for listening to this series of episodes. Make sure you listen to all three. They're very valuable, as you go through the divorce process and lots of great episodes coming for you soon.

Feb 3, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.

In this episode, we're continuing the series on my top 10 divorce tips, and I want to just jump in to the next ones. Tip number four, so if you didn't hear the previous episode, I gave tips one through three. Number four is keep the big picture in mind. If you know or ever heard of Yogi Berra, he has a funny quote that I like that says, "If you don't know where you're going, you're going to end up someplace else." And the point is with keeping the big picture in mind is what do you want? One of the questions that I will ask everyone if they don't have a clear answer for is what do you want out of life? What do you want out of the divorce process? Clearly things are going to be changing during the divorce process, and given that, you need to have some goals, some things that you're aiming for.

Start envisioning what your future looks like, and what I encourage is I encourage writing down your priorities. This is an exercise I go through every week, and I do it for me personally, but this is something you should be thinking about and thinking hard about, and it is, I usually ask two questions for if you're going through divorce. One is what are the three most important things that matter for you in the future? And secondly is what are your three most important goals for your divorce? The point is this, is if you think about your future and think about what your life may look like or what you really want to get out of life, you might not have concrete answers. Sometimes it might be a well, I want to be able to support my kid until they reach this age or get off to college, or maybe I want to start a new career, or it may be I want to pay off some debt and start fresh. There's any number of potential goals you may have. It may be I want to move. I've talked to a lot of people who say, well, I've been thinking about where I've lived isn't the place I necessarily want to be. I've been thinking about moving to some other place.

Whatever that is, it's worth writing down your goals and ultimately then sharing them with the people who are here to help you. Because one of the things that we can do, your attorney can do, you can do, is really guide yourself and guide the divorce process so that people are working towards the goals that matter most for you. And oftentimes in the divorce process, you have options, and one of the most valuable things that I think that I do and that an attorney can help you with is, hey, you have this pool of assets, but there may be five different ways to split them up that gets you to the same place, but maybe way number four is the one that actually gets you to the goals that you're aiming for. But if you don't know what those goals are and you're not able to share them, it's hard for all of us collectively to get you on the right path.

The next tip, which is tip number five, is one of my most important and one of my favorite tips when it comes to the financial side of things, and that is understand your expenses. I have a line, so I've written I guess three books at this point. One of my first books is more general financial advisor related, but I have a line in there which is one of my favorite lines. It says expenses are guaranteed, making money and investment and income is not. And so what I mean by that is that you have a fixed base of expenses. Some people call it a monthly net, monthly nut, some say it's just your expenses, but it's your housing, your car, your food, your activities, your clothes, just the normal way that you live your life. And most people don't sit down to understand, well how much do I need to cover my expenses each month?

Now, I do know some of you who know offhand, and that you know that every month you spend $8,000 or you spend $24,000 or whatever the case is, and you kind of have a pretty good idea, but most people have no idea how much they spend every month, and it's usually a shock to once you sit down and figure out what your expenses are. And so one of the things I really encourage you to do is to understand your expenses and your expense picture as you go through the divorce process and figure out what areas you might be able to cut as you go down later. Now if you complete a financial affidavit, in many states the financial affidavit or statement and net worth statement has and requires some very, very detailed expense information. And while it's admittedly a pain and perhaps kind of overwhelming to fill out that information, on the plus side, that information is very helpful when it comes to planning your future, because you'll have a baseline of like, hey, here are all the things that I've been spending on. Do these expenses make sense? Can I continue this lifestyle afterwards, or most likely, for most people that I talk to and work with is, is that you'll have to make some adjustments.

But that's okay. At least you know. And so one of the next steps I really encourage everyone to do is an exercise also that I personally do, even though I'm not in the middle of a divorce, but I do almost every month, is really understand all of my expenses. In my book Divorcing Your Money, How to Avoid Costly Divorce Mistakes, I have a great checklist of expenses that you should go through, everything from housing expenses, food, clothing, entertainment, insurance, medical expenses, transportation, debt service expenses, be it credit cards or otherwise, if you have education or child related expenses. Kind of list out the things that you should be thinking about. But like everything, when it comes to expenses, you don't always have to over complicate it. One of the things I do, and I've said this before, is I always just start with a blank sheet of paper.

I carry around stacks of blank printer paper, because that's what works for me. And I also carry around a notebook that has blank paper in it, and I just start listing things out and I say, hey, that expense is about $250 a month, that Netflix is $12 a month, this is whatever. And I just start adding it out on a monthly basis and then start figuring out, oh hey, I've got to get my car serviced once a year, which costs X amount. I had some maintenance issues on my car this year with some tire replacement. So I figure that's every few years, and I kind of plan that out. But I just, I know what my housing costs every month, electricity, water, et cetera. And I just list those things out and figure out, okay, well I spend this dollar amount a month, so it means every month just to stay even, I need to make at least this amount.

When you do this, I've worked with people of all income levels, from people who make $20,000 a year to people who make $20 or $30 million a year, and we still go through the same exercise in the same way and 100% of the time the answers are surprising to those I work with, because you're not used to looking at how much you spend, and when you really do list out all of the things that you spend money on, it will help you really figure out, well, what do you need? What do you not need as much? I spend a lot of time thinking about small subscriptions, be it a $10 a month or $20 a month thing, because I started looking at them as like, well, if I spend $10 a month, I'm probably not going to cancel that subscription. So let's see, $10 a month for a year is $120, and if I probably keep that subscription for five years, that's a $600 expense. So before I sign up for something that's $10 a month, I say, hey, is this really worth $600 to me? Because even in the short term, it doesn't feel like much every month, but in the longterm that certainly adds up. And so it's really worth thinking hard and listing out those various expenses.

Finally, one more tip that I want to get into for this episode is creating a marital history. Now, I've talked about this on the podcast before, but it's an important topic and it's worth doing, and very simple, is that you should list out all the key events when they happened in your marriage. They can be financial events, they could be relationship milestones, they could be kid related things, they could be educational related things, but what I do, it can be real estate transactions, whatever the case is, but the goal is to create a timeline. Now, why do you create a timeline of everything that happened during the marriage? Well, I put dates, could be specific dates, could be month and year. It could just be year, if that's all the information you have at the moment.

But the importance of the timeline is that when you have a timeline, it can help you in that when you have other professionals working with you, be it your attorney, be it a financial person, be it a mediator, be it whomever, they can walk through this timeline and they will be able to see, okay, I'm starting to get a picture of how the relationship started, the key events in the relationship, and in the span of five minutes, we can figure out, all right, here's a pretty good way to catch up on the last five years, 10 years, 30 years or more of marriage and understand it succinctly, rather than when you try and tell it to us, it's easy to get sidetracked. It's hard to keep everything straight. It's easy to forget different events, but when you have just a timeline, it's easy for us to say, okay, here's the key things we need to be thinking about in mind, and here's better ways that we can understand this history and therefore inform how we approach the strategy and execution of the various elements of the divorce process.

Now, when I talk about a timeline, people ask, well, what format should it be in? Does it need to be notes? Does it need to be ... I say, whatever works for you, so long as it's easy to follow. The important thing about a timeline is that it's in order. So one of the things I like is an Excel spreadsheet where one line or one column is the dates. The second column is just a short description, a sentence, two sentences, maybe three sentences at most, of what happened and why it's relevant, and in an Excel spreadsheet, it's easy. If you have a Word document, you just put it there and organize it.

The point is there's no need to over complicate it. It's just so everyone knows what's going on, and it's very useful looking back even for you as to many of the things that happened during the course of the marriage, and keeping them succinct, because if you get into them, there's oftentimes a lot of contexts you want to share and and oftentimes it's too much too soon, but you don't necessarily need to get into all of that immediately and right away. So one of the things I recommend is just keep it succinct. If there's something that your attorney is going to have more questions about or that that I'm going to have more questions about, or your financial professionals or an accountant or a business valuator, whoever it is, is going to have additional questions about, we'll ask. We know what to look for. Some things might not be relevant to us, but it all just helps, and we can distill down a lot of information quickly when you start preparing this marital history, this marital timeline of all of the key events, be it emotional, financial, family related, et cetera, that occurred, and it really helps us and helps us help you a lot better.

So the three things for this episode, is keep the big picture in mind, understand your expenses, and create a marital history. And in the next episode, I'm going to cover a few more important tips out of my top 10. We've covered the first six, and we will get into just a few more in the next episode, and some really important ones.

Jan 12, 2020

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. Learn about coaching services here.

In this episode and the next couple of episodes, I want to get into the top 10 must follow divorce tips. I want to cover a bunch of different areas quickly so that you can... If you only have to focus on 10 things, these are the 10 items to focus on. And I'm going to cover them and get into them, and in this episode I want to cover three areas of the top 10 in particular. The first is face reality head on, the second is know you can do this and the third is to get organized. The first tip is to face reality head on. When it comes to divorce and it comes to planning for a divorce or being in the middle of divorce, one of the things that you have to think about is understanding and accepting that this is happening.

Yes, it's happening to you. Yes, this is your life and this is real. And many times during this process, it can be easy to want to feel denial. Feel like you're not going through this or not want to deal with the hard and harsh reality of a relationship and maybe you want to bury your head in the sand, not accept what's happening. Maybe you're overwhelmed or anxious or depressed or filled with emotion. And unfortunately, when it comes to making decisions during divorce, particularly financial decisions, but much of many of the decisions during divorce, is you need to face the reality head on and accept that it's happening and put your emotions to the side. And even though you feel like you may have or you may have a lot of emotions floating around, when it comes to making the best financial decisions, whether you keep a house or retirement account or when to divorce or how to best protect yourself, emotions can't really play into it.

If you want to end up in the best decision possible, you have to treat it like you would a business deal. Now, it doesn't mean that you can't work through your emotions, but those are for a therapist, those are for your friends, those are for your emotional support team, but when it comes to your financial team and making financial decisions, accept it's happening and now, okay, the divorce process is happening or about to happen, what can I do to best protect myself, my kids and my future?

The second tip when it comes to the top 10 tips is understand that you got this. You have to keep in mind that the decisions that you make today are going to potentially affect you for the rest of your life. And so understand that also, you're going to get through this. Divorce in most cases last six months, a year, two years for most people, and then you're going to have the rest of your life ahead of you. And even though this may be the first time and hopefully the only time you have to go through this process, you probably have most, if not all the skills you need to get through it and make it through in one piece. And the phrase that I like to say when it comes to divorce is you have to treat yourself like you are the CEO of your divorce process. You are the chief executive officer. You are the conductor. You're the person they're in charge and making the key decisions as you navigate your life and you navigate all of the different complications in the divorce process.

Now, some of you listening, I know because I talked to you are the CEOs or are executives in companies, in which case although the situation is personal, deeply personal, you're used to making hard decisions on a daily basis, just this time it applies to your life. Others, you might have been a stay at home parent or may not have been involved in the finances or just may feel overwhelmed with the divorce process, but the funny thing about it is 100% of the people I've ever spoken to, worked with, talked to through the divorce process, have the skills to navigate through this process even if they don't feel like they have the skills to navigate the divorce process and make those key decisions and be the CEO of the divorce process.

I'll give you just a very simple example is if you are a stay at home parent, you've probably been used to running the family. You are the CEO of the family, making sure the kids got to the right place, making sure all of the appointments were handled and their lives ran smoothly. And so you may have been the CEO for the kids and the family and so it's taking this very, the skill set that you have, you may not realize you have and applying it to this really difficult and challenging area of your life, but you already have those skills. And so it's just realizing that you have those skills, those capabilities, and it doesn't mean you have to go it alone. It doesn't mean you can't get help. A good CEO has help for various divisions, so it might be legal help, might be financial help, might be emotional help, might be help with a specific issue as it comes to the divorce process. Being a CEO is not a solo job necessarily, but it does mean that you do have the power, the capability to get through this process.

And the third topic is get organized. Third tip is get organized. One of the best, most helpful things, whether you're at the beginning of the process, in the middle of the process, is just having everything organized. In fact, myself, I spend much of December and January just organizing my year because once you do it and get most of it done, it's very easy to formulate plans of attack going forward. But if you don't, if you're disorganized, it's very hard to make decisions, know where to go, be able to check to make sure you're on track with certain things, to formulate a plan, and there's a lot of different elements related to just getting organized the first time. In fact, I've spent the last two weeks and I still have another week where I am literally just spending every day, a few minutes a day organizing everything from last year and my plan for this year because that's how important it is and it makes the rest of the year regardless, I know there's going to be challenges and hiccups, but it makes it go much smoother.

And so in my new book, Divorce and Your Money, called How to Avoid Costly Divorce Mistakes, right in the beginning of the book around page 20 or so or 21, 22, is I have a really good getting organized checklist, and it covers all of the different documents that you will need to start thinking about as you go through the divorce process and I encourage you to put together a binder or if you use computer, electronic folders with all of this information, but when you get organized for divorce, it's things like when you got married, your kids' names, personal information, social security numbers, stuff like that. Just the basics, but it also includes things like listing out your major assets. When did you acquire them? What dates did you acquire them?

It has information like getting tax returns, income statements, pay stubs, things like that. Employment records, whether you have stock options. I talked to a lot of people who have stock options or incentive compensation, financial records like bank statements, investment account statements, loan statements, whether you have pension plans, there's lots of different financial details to gather regarding retirement accounts, debt, getting your credit cards and most recent credit card statements together, real estate statements, figuring out home values, mortgage balances, et cetera, but what I encourage you to do is gather up all your financial information, put it in a folder or save it on your computer somewhere, save it on a thumb drive, and when you have it organized, it's something that you can, once you... It will take you some time to sit down and gather all of your documentation and put it in the appropriate folders and file it appropriately and determine what you have and make sure you have it.

It will take you several hours, but once you have it, whether it comes to working with a divorce attorney or working with financial team, be it someone, a certified divorce financial analyst like me or an accountant or your home appraisal person, whoever is helping you during this process, you'll have the information ready and if you need to find something else, you already have such a good base. It'll make the process, all things considered, smoother and easier for everyone involved, not just you when you get organized up front. And so one of the favorite parts of my book is just there's probably five to eight or 10 pages of all the different documents you can do or you can gather to get organized and formulate a document, be it a folder or an electronic folder of information when it comes to the divorce.

Because one of the things your accountant may ask you or one of the things your attorney's going to ask you or that I might ask you is, "Hey, do you have the account statement from December, 2019, the year end account statement for your IRA account from fidelity?" And because we want to figure out the value and what to do with that state, what that account or get an approximate value for it. And if you have that information handy, it makes it very quick for us to analyze and know what to do with something versus, "Oh, hey, let me dig it out." And in two weeks you finally get access to the account. But if you have it upfront, it'll make things much easier.

So those are the first three tips in terms of my top 10 tips to start the year and top 10 tips for getting divorced that you should follow as you think about going through this process. And just a quick recap, first is, look, face reality head on. It's happening, deal with it, accept it. That's that. Second is even though you understand that it's happening and it's going to be hard, it's going to be really, really difficult. Know you've got this. This process will end. You will get through it. Take it a day at a time, take it a minute at a time. Sometimes take it a few seconds at a time, but you will get through it step by step.

And then the third thing, at least for this episode, is get organized. People who are organized, it will just make the process much smoother, much more efficient. You'll save a lot of money and time just from the organizational process. The more you can do the better. And it is one of my most important tips in terms of everything is just getting organized even if you just got organized and handed those documents off to your attorney or to me, or to whomever and just said, "Just take it." It is much better to have a set of organized documents than nothing at all or a bunch of scattered and sporadic documentation.

Jan 2, 2020

Get the new book here: https://divorceandyourmoney.com/book/

Avoid Costly Divorce Mistakes

Ending a marriage may be the most challenging life event you will ever face. Whether you’re contemplating divorce or in the middle of one right now, you need to be prepared to face the tough questions:

  • What’s going to happen to your lifestyle, money, and retirement?
  • What pitfalls should you avoid, and what steps do you need to take to move forward?
  • How do you protect your family, your children, and your future?

If you’re overwhelmed by the prospect of divorce or you’re simply fed up with one-size-fits-all online articles and advice, you need Divorce and Your Money: How to Avoid Costly Divorce Mistakes.

Written by Shawn Leamon, MBA, Certified Divorce Financial Analyst, and host of the #1 divorce financial podcast, Divorce and Your Money, this no-nonsense, user-friendly guide provides a complete plan for facing the tough decisions in your divorce. 

Shawn’s work has been seen in Time, USA Today, Yahoo! Finance, Nasdaq, San Francisco Chronicle, and many other publications across the United States. His website, DivorceAndYourMoney.com has over 1 million viewers and his podcast has over 500,000 downloads. 

With the practical strategies outlined in Divorce and Your Money, you will take control of your divorce, your money, and your future. Learn the essentials of planning for your divorce, like how to choose the right divorce strategies, determine if your attorney is fighting for you, and how to move forward to benefit you and your family. 

Nov 10, 2019

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. Learn about coaching services here.

 

In this episode, I want to focus on discussing the ins and outs of debt. It's a very controversial, and frustrating, and challenging issue that can pop up during divorce. I haven't covered it in a while, so I want to make sure that you understand the essential items when it comes to how to deal with and split debt in divorce and provide some tips so that you can make the right decisions and do what's best for your specific situation. 

When I think of a debt, the most common of course is credit card debt. Other things can be personal loans. Medical bills are common. Auto loans fall into that category. Student loans, mortgages, I'm going to exclude student loans and mortgages for the moment because they have some different intricacies than debt overall. But even if you're thinking about student loans and mortgages, many of the core principles that I'm going to talk about here apply to this episode. It really applies to any kind of debt that you may have, so you should really understand your options and what kind of the best things to do may be when splitting debt. 

The things I want to cover in the debt episode today is five, or four or five important points. I think four points we're going to focus on. I'm going to go through them in depth. The first is establish what separate versus marital property. Second is minimize and pay down joint debt. Third is split debt simply. And the fourth is going to be if one spouse is responsible for a joint debt, make sure that those payments actually get made. We're going to go through these particular items. Things you should be thinking about when it comes to your situation is debt is one of the most common things we deal with. And almost every person I get to work with, there's some sort of debt I'd say 95% of the time, and we have to figure out what we want to do with it and what the smartest options are given the situation. 

So let's start with point number one, which is establish what's separate versus marital property. This is where one of three dates can be very important in the context of your divorce. The first is the day you file for divorce. The second is what might be considered the separation date. The third might be something that is a date that's relevant in your state for a particular reason. 

Why are these dates important? Well, you want to understand, and you need to have a clear understanding, is what actually is joint debt, or marital debt I should say, and what is actually separate debt that the person who incurred it, who took on that debt needs to pay for. The reason it's so important is that many times ... Almost every day I talk to someone, like you, who says, "Hey, my spouse went up and got this big credit card bill. I didn't even know we had the card. I don't know what the money was for, et cetera. Am I responsible for it?" Or you'll say your spouse is terrible with money and did this and that, and now all of a sudden we have this debt, or he has this debt, or she has this debt. Am I responsible for half of that amount? 

 

Well, the answer is really hard and depends upon your state. But if you have a clear date of separation or a clear date of divorce, or I should say date the divorce started, that could be an indication of what debt is yours and what is not. There's also a discussion, as every state has different rules and different ways that they treat debt, but sometimes there are other dates that are of relevance. Also, I discussed before in a previous episode, if you haven't heard it, about dissipation of marital property, in which case sometimes if someone wastes money that's not related to furthering the marriage then that can be also considered separate and belonging just to that person rather than joint debt. 

But regardless of the situation, it can be ... Or I should say marital debt. Regardless of the situation, you need to really be clear and work closely with your attorney and your financial advisors to figure out, all right, what does the law say? What is actually my debt that I will be responsible for splitting? And what is the debt that solely belongs to my spouse? 

Now, there's a difference between divorce rules and other areas of the law. If your name is on the debt ... And we're going to get into this a little bit more in this episode. If your name is on the debt, then you are legally responsible for it, even if that debt may be considered separate property. If you just stop paying that debt and you're responsible for the debt, the person who ... If you went to Visa and had a credit card that had both your names on it but your spouse ran up the bill on that Visa card, you might say, "Well, it's separate property for divorce purposes." But if that spouse doesn't pay down that credit card, then they can still go after you and your credit for the remaining bill. The important thing to do, and one of the most important things in divorce, is just figuring out what you have to split and figuring out what is actually something that you're splitting versus something that gets moved on to the separate property side of the pile, and that applies equally to debt. 

The second thing is minimize and pay down any joint debt. I talk to a lot of people who have IRS debt. I talk to a lot of people have joint credit card debt. One of the pieces of advice I say is if you look at your full financial picture, one of the questions is, can you pay down this joint debt with other assets so that when this divorce is over you're not still tied to your ex-spouse in any way financially or have any liability connected to them because you still have a joint debt outstanding? And now, of course, it varies by person. But to the extent that you can talk to and talk through the joint debt issues and your financial picture will allow you to pay it down, then you should pay down that joint debt as part of the divorce process and just be done with it. Makes things much smoother or can make things much smoother down the line when you are ... after the divorce is over. 

The third tip is to split debt simply. What is most important about that is that the person whose name is on the debt, to the extent possible, in general, should be responsible for paying off that debt. Now, let me be clear, is just because they're responsible for that debt doesn't mean that it's separate property. It still could be a marital debt that just happens to have only one person's name on it. But if you have a credit card, and ... I'm just going to make up a very simple number. But if you have $1,000 on a credit card that you racked up while buying groceries over a few months, that could very well be a joint debt. But as you think about splitting things in divorce, you should take that debt and be responsible for paying it on your own after divorce is over because it's much easier than trying to transfer it to another spouse and going, to your ex spouse I should say, and going through that process. 

 

Conversely, though, you have to remember that one thing that a lot of times you forget or you may forget during the divorce process that everything is a trade-off. Negotiating a settlement or coming up with an agreement in the divorce process is just about what trade-offs are you going to make. So if you take the example of the thousand dollar marital credit card debt, you might take it as part of the divorce settlement. But still, 500 of that thousand belongs to your spouse. So what happens is you would get an extra $500 worth of another asset. It's not like you're taking the debt and you're losing out, it's that you have an extra 500 of a negative balance on your ledger so you're going to have to get $500 extra of assets somewhere else to make up for it. So, it's not a one-way street. 

 

And conversely, if your spouse has a debt, let's say they have a $5,000 debt, that turns out as marital property, well, it might just be much cleaner and simpler for that spouse to take that $5,000 debt. But conversely, to make up for it, maybe they get an extra $2,500 out of a bank account or something or proceeds from something so that they get their share of the debt. But at least you're not the one who's responsible for paying it. So there's both sides to the issue. The most important point is that it's just a trade-off. Financially, it's just numbers on a piece of paper. We want to get those numbers as fair as possible as we can, and it's easy to account for many times just by what assets you give up or what you keep. 

 

And then finally, the last point is that if one spouse is responsible for a joint debt, they need to make sure that they make ... You need to make sure that that person actually makes the payments. I'm going to give an example that I've dealt with many times in the past, which is oftentimes as part of the divorce process you have some debt and you're going to sell the home. And as part of selling the home, you need to pay off some debts with the home proceeds from the equity, and it's actually your spouse's job to pay off some of those joint debts. Well, if you sell the home and give the spouse the money to pay off the joint debts, what happens if they decide to spend that money on something else and don't pay down that debt they agreed to? Well, the money's gone.

 

Or what happens if they just hoard the money? Or what happens if they only pay down part of the debt? Or what if they tell you they paid down the debt but didn't actually do it? So maybe months down the line or years down the line you find out that that debt is still outstanding and you're getting calls from credit creditors and your credit, your personal credit, goes down the drain because your spouse didn't do what he or she was supposed to do with the proceeds that you gave them. 

 

Or if you're not even giving the proceeds, sometimes you could just say, "Hey, there's this credit card from MasterCard that has $10,000 outstanding. It's the sole responsibility of your ex-spouse to pay that card down," and to not hold you liable. Well, it's all well and fine that you came up with that agreement, but MasterCard didn't agree to your divorce settlement. So if your spouse doesn't pay that debt, then they will be coming after you for the remaining balance. The point is is this is why I also said in point number two is to minimize and pay down any joint debt. When you do have some debt that's outstanding, you really need to make sure that your spouse or ex-spouse is on top of paying that ... or that debt down because it can come back to haunt you later. 

 

So here are the four things to focus on when it comes to debt. The first is establish what's separate or marital property. The second is minimize and pay down any joint debt. Third is split debt simply. The person with the name on it, generally speaking, should be the person who keeps it, and takes it after divorce, and takes that responsibility. And forth is if one spouse is responsible for a joint debt then makes sure that they make the payments.

 

Here's the big overarching thing that I always keep in mind when talking about debt, and that is you want to minimize your liability. You don't want to be liable or have liability connected to your ex-spouse when the divorce is over, particularly when it comes to debt. Look, you might always have kids or something like that together, so you're always connected to them. But when it comes to certain financial things, if you can avoid having joint accounts with both of your names on it, it prevents anything bad from happening later down the line with those joint accounts if one spouse racks up a bill, or if one spouse fails to pay a bill, or if one spouse steal some funds from something. Whatever the case may be, it's oftentimes much, much more expensive to try and go back through the legal process than just dealing with these things with a little bit of foresight and thinking about them in advance. 

 

I really want you to listen to this episode, understand the key points, and think about the debt that you may have as part of your divorce. Make sure that you're handling it and splitting it the right way because it's a very important topic that we have to deal with and deal with carefully to make sure that you end up in a good position when this process is complete.

Oct 27, 2019

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One of the challenges in divorce is making sure that separate property stays separate. And it could be the case that you're trying to prove what's being claimed as separate property is actually marital property. Now it's a bit of an advanced topic, but an important one, and just a reminder, and I said this in the previous episode, if something is marital property, it means you have to split the value of it between you and your spouse during divorce. And if it's separate property, then the person whose separate property it belongs to gets to keep it and you don't really discuss it at all as far as the divorce goes.

One of the most common types of separate property is an inheritance where the parents of one spouse gives them a bunch of money. He may be married or not married at the time and that inheritance is a common type of separate property that exists. Another time it could be a retirement account or a house bought before the marriage.

Now if you didn't listen to the previous episode on tracing and how to trace separate and marital property, that is important context for this episode. But also I want to give you some different tips and how to keep separate property separate and how to maybe prove that that separate property is actually marital property and ways to do that cleanly and things that you can think about. Because also one of the important points when it comes to separate and marital property is sometimes not all of the property is separate. So sometimes a piece of property, let's just say it's worth 100 bucks, could be an inheritance, could be a retirement account or something else and say it's $100 today. Well it could be the case that 10 of those $100 are actually marital property or 50 of those $100 are marital property or all of that hundred is marital property.

It's not always an all or nothing thing and so there are some gray areas and I want to show you how to avoid the gray areas depending upon who you are or actually to ensure that there are some gray areas so you can get your appropriate share. Now the other thing I always have to say, particularly with this type of an episode, is state laws vary a lot in terms of the languages they use and how they discuss whether something is separate or marital property. So make sure you ask your attorney some of the mechanics of the particular asset that you're discussing when it comes to this. But I'm going to give you three tips in this episode on how to keep separate property separate. And that's what I'm going to focus on. One is to avoid co-mingling. Two is to keep track of income and dividends and three is a prenup or postnup.

So let's get into these. Let's start with point number one which is avoid co-mingling. It's a term you've probably heard before and it just means keep something that's separate property, always in a separate account with only your name on it. And so if you get an inheritance, let's just say a $100 inheritance, because we can all do math on $100. Let's say you get an inheritance of $100 and you got it a decade ago. Make sure that that inheritance only went to a bank account and stays in a bank account in your name only. And then the other element to that is don't ever move those funds to a joint account because once you move those funds to a joint account and they get mixed up with a bunch of joint assets, it makes it very, very complicated, expensive and challenging to go back in time and try and figure out how much of that asset is marital property and how much of that asset is separate property.

The second point to think about is that you need to keep track of income and dividends, so it's not just enough to keep money in a separate account to keep that property separate. Sometimes, depending upon your state laws, the income from that account or the dividends that come in from the account or other things related to that could become marital property and they don't stay separate.

So if you get, let's just say you have an account with $100 in it and every year you get one extra dollar in income on that account. So after 10 years you've got $10 of income. Well, you need to keep track of that income every year and maybe even deposit that income into a separate bank account. It can still keep your name and your name only on it, but when you keep track of it in a separate account, it makes it easier to figure out, "Hey, that portion of the account may ultimately be marital property, therefore let's keep it." And that way it's easy to track it and you don't have to go get a bunch of forensic experts to say, "Oh yeah, here's where all the income came in."

Some of the terminology used for this is an income sweep account, if you go to a bank or something like that, and that means that the income is swept into the various portions of your account. The way to do that, or so if you're on the other side of that issue, even if an account is mostly separate, you need to go back and ask your spouse or get the records to see if any income came in from that account because that income may be marital property for you to discuss and split up.

And so that's where one of the levels of complication comes in. But to the extent you can avoid it, if you're the person who owns that account, you want to keep it clear if any income came in or dividends came in and make sure that that is separate. It just depends on the state laws whether or not that income is considered separate or marital. And so you need to ask your attorney how it applies in your state and your situation. But that's something to think about.

The third thing to think of, if you are able to have some foresight and that is to get a prenup or a postnup. Now, if you're listening to this podcast, you probably are not thinking about a prenup, but you might have one that exists, in which case it would be important to think about what's in that prenup. But also you might be able to investigate a postnup or postnuptial agreement, in which case you can designate certain assets as separate in the event that you get divorced. And one of the places I actually see a lot of postnuptial agreements and a lot of prenuptial agreements is second marriages, and even a postnup.

If you're getting married after 40 or 50 it's very possible to go back and get a postnup and get that. And if you agreed to a postnup, you can designate a particular inheritance or designate a business or a home or retirement account or whatever the asset is as separate property in the event that you were to get divorced. So that's something else to consider.

And if you're on good terms with the spouse and maybe a divorce isn't for another several years, you could perhaps, depending upon the situation, have that discussion about a postnuptial agreement and go from there in terms of protecting yourself and protecting a particular asset as it goes on, as time goes on, and keeping that separate property separate.

Now one last warning, one last topic and that is is even if you do everything perfectly, it can still get brought up in a divorce and it can still be a fight and a discussion that comes up as part of the divorce process or at a minimum, the opposing, your spouse's attorney can ask for records related to a certain asset even if you did everything properly. So one of the things I talk with you about all the time on coaching calls is, "You kept it separate, it was clear it's separate, but your spouse's attorney is getting a bunch of records on the particular asset," or it could be a house, could be inheritance, whatever, and you get worried. Well, if you did everything right, there's nothing to worry about.

Now if you're on the other side and you didn't do everything right, there are certainly some things to think about and things to prepare for. But, and there might be some more expense involved, but if you did everything right, so be it. The way that I look at this on a different way is even if you do everything right and you did everything right and your spouse's attorney is asking for records on things, it's their job to.

And so your job is to make sure you have all the records and have everything cleanly set up so that there's no question when it comes up. It's their job to question everything and try and get more assets for their client. So even if you do things perfectly, you're not necessarily out of the woods, but if you don't do things perfectly, it can really complicate things down the line. And so what I want you to do with this episode is make sure you're thinking about and you understand and you have a concept of all the issues you might be facing when it comes to separate property or marital property and how to keep things separate or how to challenge whether something is actually separate or marital property. And the three tips are avoid co-mingling the assets, keep track of income and dividends and finally to consider the prenup or postnup as it comes to getting divorced.

 

Oct 13, 2019

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In divorce, one of the big questions is whether something is separate property or marital property. If it's separate property, than the person who had it before divorce keeps it. And if it's marital property, the value needs to be split amongst the people divorcing. And so, one of the questions that we deal with a lot and I help people navigate is how do prove whether something is separate property or marital property. And what do I mean?

Well, the most common is an inheritance. If an inheritance was given to one person, is that still considered separate property or is it marital property? Inheritances, sometimes they're small, but sometimes they are very big because they can be a parent's lifetime of savings. Could be something like a retirement account, where there was money in the account before you got married and then it grew during the marriage. But how much of that is marital property that you split and how much of that is considered separate property?

What about the house? Same deal is what if you bought it before you were married. Does a person who bought the home beforehand own the house or not. It could be things like trust, business interest. There's a lot of different assets and many different questions that can arise when trying to determine whether something is separate or marital property. It's a big deal because if you prove that something's separate property, it doesn't get split, but if you prove it's marital property, the value does get split as part of the divorce process. But the big challenge is, is how do you prove something is one type of property or another.

And it's an important discussion and something that we work with on a lot of our divorce calls or coaching calls, I should say, for people going through divorce or preparing to go through divorce. And the difference or figuring out the answer can often mean the difference between hundreds of thousands of dollars that one spouse gets or has to give up or even millions of dollars in some cases depending upon the asset.

The problem with this subject is it's really complicated and I'm going to discuss a term called tracing. It's T-R-A-C-I-N-G, tracing. And that's going to be the subject of today's episode. And it's the process of figuring out whether if something is separate or marital property. And to compound things further is sometimes an asset that you're discussing or even a debt in some cases that you're discussing can be both separate and marital property at the same time. And so, figuring out what it is can be extra complicated. And really for the sake of this episode, I want to focus really on just two things. I want to introduce you to the subject, but the two things I want to focus on are one, getting the appropriate documentation. And two is hiring the appropriate financial experts.

So, the first and biggest and most complex challenge with tracing assets is having the documentation. And for the sake of the example, I started the episode with different types of examples, but we're going to take a retirement account for the sake of an example as I walk through this episode because it's easy to illustrate the point as to why this gets complicated. One of the biggest issues with getting the documentation is that it can be old. If you've been married 10 years, then you have to go back and get statements from 10 years ago. If you've been married 20 years, then it could be 20 years ago. If it's been 40 years, then you're trying to get documentation from 40 years ago. And as businesses change, as the world changes, a lot of the institutions that you may have had at the beginning don't have those account statements at in their records anymore. Some times they might only have a year or three years or five years.

And so, trying to go back and get 10 or 20 years or 30 years of data is very difficult. But the important part is, or why this is so important, is that you need to be able to track where every dollar came and went to the extent possible over the timeline of your marriage. Now, here's a really important question to ask your attorney because state laws really differ on this subject, but many states have laws in place that property is assumed to be marital unless you can prove it as separate. And so, you really need to be careful because other states have different rules regarding this. So I don't want to generalize too much on this point, but this is why getting the documentation is important is if you can't prove or oftentimes if a spouse can't prove that the property is indeed separate, it's marital property. It needs to be split.

Now, depending upon what side of the issue you're on, that could be good for you or that could be bad for you. And we're going to talk about some ways around it. But the point of that is you need to be keeping good records and you need to be keeping your account statement. And often times, if you walk into your local bank or you call Fidelity or you're financial firm up and you ask for records, they might say, "Well, we only have a couple of years worth and that's all we can provide." Well, that doesn't really help too much, but believe it or not, you might just have to keep digging and they might actually have more records than they will initially tell you. One of the things I always encourage you to do on coaching calls is don't stop at the first no, where they say they only have X amount of records. Most financial firms have many, many more years of records than they will initially tell you. The challenge is you have to figure out who will provide you access to them and how to get access to them, particularly if it's for your account.

For a variety of reasons, they are legally required to keep many years of data. And sometimes it's in paper format, sometimes it's in a warehouse somewhere, but they often have that information for you to get. And so even if you get a first no when trying to get the financial data, don't worry. There will be more opportunities if you keep digging and it may require some help with an attorney regarding a subpoena to see officially what that firm has in terms of data.

Now, ideally also for yourself, if you're thinking about this, I encourage you to keep good records, keep backups of all of your records, particularly for important accounts over the years because having a snapshot of those can come in handy when it comes to something like tracing. Now, there's also an easier solution to all of this and this is... I don't want to get your hopes up too much because this easy solution does not work in all cases. And when it works it's great, but to be fair, most of the time it doesn't work, but sometimes it does and it is worth bringing up. And particularly if you can avoid a bunch of legal fees and expensive fees, I'm going to get to fees and financial experts in the next section of this episode. But if you get this easy solution, I encourage you to use it and it works for both parties.

If you come up with a reasonable guess. And that is that you guess, you estimate. You make an estimate of how much of a certain asset was separate and how much of a certain asset was marital. So, if you know that there was an inheritance and it might have come 15 years ago, that you got an inheritance or a spouse got an inheritance and it might've been at the time $112,363. Well, no one really remembers the exact amount, but if you both think it was around about a $100,000 and you're willing to agree that it was about a $100,000, and you can move on, then move on. Rather than trying to track down, you're going to spend that extra $10,000 or $15,000 just trying to track down all the records and you might've been better off just estimating.

Now, it doesn't always work that you come up with a reasonable estimate and there's reasons in the divorce process you might want to estimate too high or too low, but if it gets you to a reasonable point. And my whole goal with everyone's divorce is to get this done as quickly as possible in good enough shape and as reasonable as possible. And if you can do this reasonably, and it's an ethical guess, I always say we don't want to screw anyone, but if the estimate is reasonable and your both willing to agree to the separate property estimate, that is the easy solution. But that doesn't work in all cases. And oftentimes, this is very complicated in terms of tracing assets, as are many issues in divorce. Now the other question is... So, part one is just gathering the documentation, while part two is getting the information and how do you get someone to analyze the information that you may be looking at.

And that's with the help of a financial expert. And so, most attorneys have good relationships with financial experts, particularly good attorneys will certainly have a good relationship with a financial expert. And it's usually someone who is a CPA or a forensic accountant and their job is to trace assets. Their job is to figure out where money came from and where it went and what value is there to be split for the purpose of the divorce. And the first thing they're going to ask for is come up with whatever documentation you have. Sometimes when looking at the documentation, they might have to make some estimates of their own. They might say, well, the account grew at X amount. We don't think there were any deposits or withdrawals. The market went up this amount. So, we think that 70% of this portion of this account is marital and only 30% is separate.

Or they might go the other way around. But the point is a financial expert is there to try and make the best estimate or best guess or use their expertise to figure out precisely in some cases how much, what assets are available. And the other thing... When you come with a financial expert, one of the things I always say is if you can get a neutral financial expert to do the tracing that both lawyers and both of you as clients agree upon and people divorcing agree upon, then almost always you should go with the neutral. But if your spouse, for example, hires a financial expert and they spend $5,000 or $10,000 or $30,000 or $50,000 looking at these records or more in some cases, but if they go through this process of looking at the records and the details and everything else, I always say this. If your spouse is writing a check to someone and they're working for your spouse, how do you think the conclusions going to look?

Most of the time, the vast majority of the time, the conclusion they're going to come up with is going to be in your spouse's favor. And so, if that's the case, you're going to likely want your own financial expert to analyze things as well and come up with their conclusion. I'm willing to bet that that conclusion will be more akin to what you are looking for on your side. All of that said is if we have two financial experts on a top of two divorce attorneys on top of any other number of people that get involved in the divorce process, it becomes very expensive.

One last section I want to cover when it comes to tracing is that tracing is not an all or nothing proposition. It's not the case that something is often 100% marital or 100% separate. Sometimes, an account that may be mostly separate still may have marital portions to it. And the episode after this is going to be on how do you keep separate property separate and also basically the ways to figure out if separate property indeed has marital components as well to it, so it'll help both sides depending upon what issue you're facing. But one of the things that could happen, and let's just say you got... Let me use very, very simple math. Let's say you got an inheritance of $100 and you put it in your separate account. And that was 10 years ago. Well over time, that $100 grew to $110 because you were getting interest or maybe dividends or whatever the case from that $100 account.

Well, it could be the case that $10 of income is actually marital property, but the original $100 is still separate property. And what you'd have to figure out is, well, how much did you actually get and how much income came in? And so, it's another layer of complication that even though tracing sometimes could mean an asset is 100% separate. Sometimes it can mean it's 100% marital, but other times it could be a gray area. And you need to be prepared for the gray area and understand the nuances and the complexities of the gray area, is yet another thing that you may be thinking about in the divorce process.

The point is it's complicated. You have to get your documentation. You need an expert to help you interpret the information and go through the information and provide an expert opinion that you could use during negotiations or in court if it comes to that. But you need to really understand, or I want to introduce you to this topic, because it's something that's very relevant in many of the coaching calls. And I want you to be informed and have some things to think about as you consider what assets you're actually going to be splitting as part of the divorce process.

Sep 12, 2019

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. Learn about coaching services here.

 

Shawn Leamon: As I record this episode, there are about four months left in the year, and you may be at a time crunch trying to wrap things up before year end. I want to give you some tips on how you might be able to do that, regardless of where you are in the divorce process. Some of you might not have even filed, I've talked to a few of you who are thinking about filing and wanting things wrapped up by year end, and others of you are preparing for settlement negotiations and other things so that you can have it in before the end of the year is out. Of course, there's many reasons to want the divorce to be finalized as the year wraps up. The main reason, of course, just being sanity sake. You get to start the new year a fresh, you get this divorce process behind you, and it gets put into the rear view mirror.

Shawn Leamon: There are practical and family considerations. Sometimes it might have to do with something like getting a new place, or a new home, or credit reasons as you think about moving. There are tax considerations, such as if you get divorced by December 31st of this year, it means you're divorced for the whole year, so for 2019 you get to file taxes as a single person or whatever status you reflect or choose, which may be beneficial for you for a variety of reasons. That's something to think about. But the point is is that you're trying to get this wrapped up before the next year starts.

Shawn Leamon: Now, the big challenge is is that where in September as I record this, there's only three and a half months or so before the year is up, and that is not a lot of time. Just for understanding sake, is that divorce under normal circumstances takes one to two years on average. It by nature is a very slow process, and trying to wrap up and rush the divorce in the span of a few months will not always work. But if you've been at the process for a little bit of time, there may be some opportunities to button it up, close it up, and move on in an efficient manner.

Shawn Leamon: Just something to note if you haven't filed for divorce yet. Almost every state, well I should say every state, I think has a cooling off period for divorce. What does that mean? It means from the date that you file, it doesn't mean that you can have your divorce granted until a certain amount of time has passed. On the short end, states have a 30 to 60 day cooling off period before you can get divorced. You have to look at your state to figure out what the rules are.

Shawn Leamon: On the longer end, some states mandate that you are separated for up to a year or more before they allow a divorce to be granted, so there are very different rules in terms of the cooling off period for divorce. You need to figure out what the rules are in your state. It may be the case that if you haven't filed yet, you need to file first thing so that you can at least get that clock ticking. And so if you have to wait 60 days or 90 days, you'll be able to get that divorce through, even if you take the time in between to figure out all the details. Just something to note and figure out the laws in your state, to get that time clock ticking, or if it is as long as a year, so be it, it is the the nature of things, but you'll need to know that for next year so that you're not dragging it out an extra a year's time anyway. Be aware of that and plan in advance or plan quickly.

Shawn Leamon: Now, the main thing that comes up when you are trying to wrap up a divorce quickly is the negotiation time. One of the things that people don't think about or don't realize is that you can negotiate much of the divorce up front, and you could in theory have the divorce settlement attached to the divorce filing, and then you're just waiting for the time to click off and you're on your way. One of the things I encourage, or at least worth thinking about, if your situation permits it, and that's always an if, is that you can negotiate a lot in advance before you file.

Shawn Leamon: Oftentimes, you can work with your spouse, I know that might not sound like the most appealing option, but they call it the kitchen table divorce settlement, where you and your spouse sit around the kitchen table, you look at all your assets and debts, you divvy them up to something that looks fair and say, "Hey, we're going to take this agreement to an attorney, have the attorney draft it up, and then we're more or less done." That is the best case scenario, and I work with a lot of people like you who might be going through that process, and my job is merely just to check over and make sure nothing's missing and everything looks fair, but that is a way to file and complete the divorce efficiently.

Shawn Leamon: Now, there is another option which is the middle ground. As I said, if you have a cooling off or if you haven't filled out the cooling off period, you can say like, "Hey, I'm going to file for divorce now and let's take the next 60 days to come up with our negotiation, do our discovery as best we can, and come up with that settlement, and just put a rush on the process." I mean the parts of the process that are slow is if you wait for the deadlines to do everything. You and your spouse and your attorneys can work out things quickly if you're willing to work out things quickly and if you're willing to be open with each other in terms of what exists in the discovery process doesn't take forever.

Shawn Leamon: One of the largest or most complex parts of the divorce process is just figuring out what you own and what you owe, and if you are upfront about what you own and what you owe, you can come to a negotiation really in the span of a couple of days if you work at it and put your time, attention, and focus on it and negotiations. There's plenty of times, even in some of the most complex situations where, and I haven't talked about some of these examples in awhile, but you know you might go to a two day mediation, you might go away for a weekend and do a mediation, or you might spend two or three days or a day just mediating all the issues in your divorce. And you can, once you know what you're dealing with, it's very realistic to expect things can be done in a day.

Shawn Leamon: The big problem is that scheduling can have conflicts. There's life conflicts. There's work. Oftentimes if you're not forthcoming about what exists, and what your assets are, and if you have to track down a bunch of things, it slows down and delays the process and you may as well just plan for the next year.

Shawn Leamon: Also, if one of the parties is just not cooperating or is being unreasonable, that can also hinder the divorce process and mean you have to go to settlement conferences, and court dates and temporary orders, and this and that, and your next court date if you file today might not be for 90 days, just because the court has enough on its plate and it's backed up, and you're automatically into the next year if that's the case and that's the way it's going to go. But that said is if you can, even in bad situations, and I see it all the time, and for better for worse, I have to deal with the tougher divorces almost all the time, that time pressure of the end of the year can really motivate someone to want to get things done and wrapped up and settled quickly.

Shawn Leamon: Now, the word of caution when it comes to rushing your divorce is make sure the decisions you're making are still the right ones. One of my favorite phrases is penny wise, pound foolish, meaning you're trying to save a few pennies but you're losing a few pounds, and when I say pounds it's, I think it's a British phrase, so I mean British pounds. I could be making that up and I could be wrong about that statement. But when they say pound foolish, they mean try not save a few pennies and lose many, many dollars by trying to save a few pennies. The point of that being is if you are rushing the divorce and you end up with a much worse settlement, maybe it's not worth rushing the divorce process. But if you can end up in a reasonable place with the divorce, you can start to get that done and get things wrapped up by the end of the year.

Shawn Leamon: Now, one other thing I want to make sure that you're aware of as you think about your timeline and how you may want the end of the year to play out as it pertains to your divorce. Just because you come to a settlement on December 31st doesn't mean the court has signed off on it on December 31st, and so you may end up still with the divorce bleeding over into the next year. One of the things I'm doing, you think about that is get your settlement in as soon as possible so the court can sign off on it. One of the things I've seen, and this is something that you need to contact an attorney about to figure out how your local courts work. In some courts around the country, they understand that people want to be divorced as of the end of the year.

Shawn Leamon: Happens is you might submit your divorce settlement on December 22nd, but in some places the courts are closed Christmas through New Years, and so you're in this weird position where you filed your paperwork but it's not signed off, and you're like, "Well, why did we rush to sign the paperwork?" Well, some courts actually have a solution for that. Not all courts. I don't know how your local court is actually going to work, and I would contact an attorney to figure this out, but if you get that paperwork in towards the end of the month in December and the court hasn't signed off on it, I do know some courts that will backdate your paperwork for you.

Shawn Leamon: They might have a month or two of work just on their docket and they can't get to it, and so what they'll say is, "Hey, you've got your paperwork in by the deadline, even though even though the judge hasn't looked at this order until February 22nd of the next year." The judge will say, "Hey, you got the documents in on time. From a legal perspective, you are divorced as of the end of the previous year. All is well, even though I didn't sign off on it until it's later." So they'll do the backdating for you and make sure that you don't get screwed just because they have a lot of work on their plate.

Shawn Leamon: Something to think about and something to ask a local attorney to figure out how the courts work in your system. But regardless of what it is, now is the time to really be thinking about, I don't want to say rushing, but really being speedy about this divorce process and not delaying if you want it over this year. If you don't, there's no reason to rush and you might as well take your time, but for peace of mind's sake for some, for tax reasons, practical reasons, moving on for others, if you want to move to a new state, get a new job, whatever the case may be, having this divorce finalized by year end can be the lifting of a big burden off your back for many. Something to think about as we're in September here, and I just want to make sure that you're aware that the clock is ticking.

 

Aug 25, 2019

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. Learn about coaching services here.

 

One of the questions that comes up often that is a source of confusion, is how does life insurance work during the divorce process and actually afterwards. I want to take some time and clarify how it could work and how it might apply to you. I'm going to start with how it works during the divorce process. Then also talk about the role after the divorce process because it's not always intuitive and it's usually not what people think. The first element is, during divorce the question that people ask, is life insurance something that's split or how does that work? Does it have value? Generally speaking, it depends on what kind of life insurance policy you have. Most life insurance policies, not all, but most life insurance policies are what's called term life insurance, which is a policy that exists for a certain term or certain number of years.

 

You buy this life insurance policy. It may be for 20 years and you pay a monthly amount and if you were to pass away during that time, then that life insurance policy pays out. But after that time frame passes, that money goes away and you don't get it back and that life insurance policy doesn't have any value. Conversely, some life insurance policies are called whole life policies which are just that. There are many complications and variations within them, but they cover your whole life. They don't have a term, they don't have an ending date. What's important about whole life policies is that oftentimes whole life policies build up what's called a cash value. That cash value is the case or the place where when you build up that policy, there is some value to it that you can cash out or borrow against or sell the policy for, that has value associated with it.

 

The real goal is, is to figure out, well what type of life insurance policy do you have and does it have any value. Now, term policies generally speaking, have zero value to them. If you're thinking about your financial information or you're splitting up your assets or whatever, oftentimes you'll see the life insurance policy and you'll put the value. You'll need to list that you have the life insurance policy, but the value on it might be zero. So there's nothing to discuss or at least to split when it comes to the policy itself. That's most common with term policies and, just as an aside, is the reason that term policies are so common, is because they don't have a value at the end, they tend to be cheaper. Term policies tend to be less expensive for people then the whole life policies and just more common and simpler.

 

I just see them a lot more often and I think they're more popular than the whole life policies. It's just something you should be aware of but nothing to worry about there. Just want to make sure that you understand why it doesn't have any value in why it's so common. Then also if you have a whole life policy. So the question I'll ask is if you have a whole life policy and you're trying to split things during divorce, my question to you will be, well, what is that policy worth? What's the cash value on that policy? If there is a cash value to the policy, then that is an asset that needs to be split and needs to be discussed. Usually you don't physically split a life insurance policy, but the person who owns it, that goes on their side of the ledger and then the person who doesn't own that life insurance policy gets their share of the value from it, usually from some other asset.

 

Rarely do you actually take the cash out from the life insurance policy. It is an option and there's lots of intricacies and complications to it, but we're not gonna go through it cause it's just so minute and varies so often. But it is an asset, no different than a retirement account or a bank account or a valuable or collectible or whatever is. It has value and therefore it is something whose value you need to determine who's going to keep and what someone else is going to get in exchange for that life insurance policy. Now, the other side of the equation is after divorce, how does life insurance work? It's something that's interesting because oftentimes I'll hear from you, you'll say like, "Hey, my spouse is requiring me to get a life insurance policy. Does that make sense? Why am I getting a life insurance policy that my spouse owns or my spouse is the beneficiary of or whatever?".

 

Some cases, I'll tell you also like, "Hey, you should require that your spouse gets a life insurance policy", or I should say soon to be ex-spouse, "gets a life insurance policy because it can be effective for you." Here is the scenario. Why does that matter? Well, what matters is that if there are ongoing support payments, and they could be alimony/spousal support or they could be child support payments. If they're ongoing payments, then you may want to have an insurance arrangement ... I also include disability insurance. We're just talking life insurance for the moment ... to secure the spousal support or the child support payments. What do I mean? Well, I'm going to give you a very common scenario and I'm gonna try and keep the math very simple so you understand, and I can illustrate the point very clearly for you.

 

Let's just say you and your spouse have come to a settlement and your spouse owes you $1,000 a month in support ... Doesn't really matter what kind of support ... over five years. So $1,000 a month over five years. So after one year, that's $12,000 of support. In five years that's $60,000 total support that you're going to be owed. Well, what happens if your spouse were to pass away during that time? Well, if that were the case and you didn't have any kind of insurance, you would just be out of money. You would just stop getting those payments and you would have no way to get those funds that you were owed. Or, at least, it would be very difficult to get those funds that you are owed because there was no insurance set up that you owned and that could be devastating to your life.

 

Now, I use the example of 1,000 a month, but sometimes it's 3,000 a month or 5,000 a month or whatever the case may be or more. If you don't have life insurance to cover that, that can cause real harm to you if the unforeseen were to happen. Now, the element or what you would do is, so you have $1,000 a month for five years, so $60,000 of support payments coming in. What you would say is, "Hey, spouse, you need to get a life insurance policy with a total amount of $60,000 of coverage so if something were to happen to you, some unfortunate circumstance would happen to you, that I, the person receiving support, am not left out in the dust and finding myself broke all of a sudden because of your passing." If that person did pass away, you would get a check for $60,000 which would cover all of your support payments that are outstanding.

 

Or to take it another direction, if you're the person paying the support, someone may request of you to get a life insurance policy for all the outstanding support payments just to make sure that if something were to happen, that those support payments don't just disappear, but that person receives the support that you had agreed to. Now, it gets a little bit more complicated because there are a couple things that we have to think about. One is, who owns the policy and two is, can we adjust that policy down the line? What do I mean? Well, the first is who owns the policy. One of the things that's very tricky is if one person is the owner of a life insurance policy. You can't just call up the life insurance firm after your divorce and say, "Hey, does my ex-spouse still have that life insurance policy?"

 

No. And that ex-spouse might say, "Hey, I don't feel like paying for this policy anymore" and just stop paying it. If the worst case scenario were to happen, then you'd be in a position where they stop paying for the policy so the policy lapses. If they were to pass away, you don't get any money. One of the things that people write into the agreement is either the spouse receiving the policy is the owner or there's some sort of verification so that you can check in at least once a year, but usually more often than that, to make sure that the life insurance policy is still current and it is acceptable and everything is going on. The spouse that has the policy is required to provide verification anytime it's requested, at least annually, just to make sure that nothing goes missing.

 

Now, if you're the person paying the policy, if you're the one who's like, "Well, I'm already paying all the support and I have to pay for a policy on top of that, that doesn't seem fair to me." And I understand the concern. I'm not gonna make a judgment one way if it's right or wrong. My job is just to help people set up their financial picture in the best way possible. One of the things I would suggest, particularly if you're concerned about that, is to reduce the life insurance policy amount every year. What does that mean? Well, one of the ways to reduce your life insurance bill, and makes plenty of sense for me and whenever you see the scenarios is, let's go back to our scenario of $1,000 a month for five years. That's $60,000 total. Let's just keep the math very simple.

 

Let's just say one year has passed. Then there's only $48,000 cause you're paying 12,000 a year. One year has passed. There's four years of support left at $1,000 a month. That's 12,000 a year times four years or $48,000 of support payments are outstanding. But you took out a life insurance policy for $60,000. What you could do is say, "Hey, every year I'm going to reduce my life insurance policy amount by the amount of support that's outstanding." So instead of carrying $60,000 of life insurance, after one year you only have to carry 48,000. Then the next year you only have to carry 36,000 and then the next year 24, the next year 12 and then you're done. The reason you would do that is the lower the amount of life insurance coverage that you have, the cheaper your monthly premiums are going to be.

 

I see something very often, or at least I encourage people who have enough foresight to think about this kind of thing, is to say, "Hey, here's a way that we can reduce your burden", and there's no reason if you're the ex-spouse who's receiving support, you would have any issue with them declining the coverage or reducing the amount of coverage by the total outstanding support amount, because you still one way or another are going to get all the money that you had agreed upon. Now, it does potentially get complicated and it's something you have to stay on top of and you have to do the calculations, but it's certainly something that you can write into the divorce decree. It's something that you can negotiate in advance and there's no issue, no reason, that you shouldn't be able to reduce the amount of life insurance that you have for the outstanding support each year.

 

Another thing that I bring up, and this one is sensitive to state laws and also who's very savvy, and that is who's paying for the life insurance policy. Sometimes I'll say, ‘Hey,’ depending upon who's asking and what the scenario is and what the individual circumstances are. If one person wants a life insurance policy, the other person doesn't, or if it doesn't come up, you can split the cost. Split the cost of the premiums so that you're both sharing in it and it's something that you can, so you'll know exactly that it's getting paid every month, you're both sharing it and it doesn't feel like an unnecessary burden to either party.

 

The after-divorce scenario has a lot more moving parts to it, but I just went through them quickly so that you can understand what types of things that you should be thinking about when it comes to life insurance. A quick summary. During divorce, whole life policies generally have a cash value in which case you will need to split that and that's an important asset. Term policies generally don't have any value to them and therefore, although you need to declare them or disclose them, they don't really have a value that you split. Then after divorce, life insurance is often times used to secure a settlement for the outstanding support payments. If the unforeseen were to happen, the person who has potentially many years of support still supposed to be coming to them, that support is not interrupted by a spouse's passing.

 

One last minor point to that, because I went through a lot of very moving parts on that quickly. The other moving part is if you're really savvy and you really want to push for it, you can also get disability insurance as well for that same scenario of after divorce. Not just what if one spouse passes away, but what if that one spouse becomes disabled and still owes you a bunch of spousal support payments? You can't necessarily expect them to be able to pay for your life if they're disabled and can't work. Disability insurance is another way, very similar to life insurance in terms of the mechanics, that you could set that up for your future and protect yourself if there are outstanding support payments.

Aug 5, 2019

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As anyone who listens to the show regularly knows, there's a lot of different moving parts to be thinking about as you go through the divorce process. Sometimes there are some things that are less obvious that you may want to consider as you are filing for divorce, living your life and just doing some of the normal financial things that you should be doing. One of the questions that comes up, only on occasion, but it's a very important question when it does arise is while you're going through the divorce process, is it better to file your taxes as married filing jointly or married filing separately? While you are still married, you have those two options as a status to elect when you file your taxes. It can be an important question. I'll get into the reasons some of you might consider filing separately in a moment.

 

But historically, most couples file married filing jointly for as long as they can. What that means is that you file one tax return for the two of you and both of you are supposed to sign it independently. The reason you filed jointly as one tax return is for two main reasons. One is that you get the maximum amount of deductions as part of your tax return, meaning, in general, you pay less in taxes at the end of the year. The second reason is it's much simpler for couples usually just to have one single tax return. It means you're only paying one accountant to prepare one return instead of maybe two accountants to prepare two returns or whatever the case may be. You’re probably accustomed to using married filing jointly, but when the divorce process arises or if you're thinking about separation, there are times where it makes a lot of sense to file your taxes as married filing separately.

 

I'm going to go through quickly some reasons to do this. At the end of the day, ultimately everyone's situation is different. The best way to figure out how you should file your taxes is to work with an accountant to figure out what exactly makes the most sense given your specific situations, but let's think about... And you should always be aware of your options in the divorce process even if you don't ultimately choose it. So why might someone choose married filing separately? Well, there's actually a scenario. The first thing is that you could actually save on taxes if you are filing married filing separately. If you're filing separately, I'll just say to simplify the phrase. If you're the person in the relationship who has a lower a set of income or no income at all, you might end up saving actually overall on your tax bill. And conversely, if you're the higher income earner and you file separately, then you're likely going to have a much higher tax bill than if you filed jointly. That's just the way the tax rules are written. That's the first thing to be aware of.

 

The second is something that comes up very frequently, particularly when it comes to divorce. That is, you want to minimize your liability when it comes to what your spouse does on the tax return. Why might someone want to minimize their liability? Well, I speak to many scenarios where one spouse is, I'll just say, doing something suspicious or you suspect a spouse of doing something suspicious with their tax returns. It could mean... Scenarios include they could have a cash business and they're not reporting all of their income and you're worried that they may get audited and that would come back and affect you because you're under-reporting and underpaying your taxes.

 

It could mean that you just don't trust them that they're doing the right thing in their tax bill or they're misstating something and you don't want to be connected to them. You might not know what it is, but you don't want to be connected to them for the future and risk the tax man coming back after you later down the line. There are other things to think about when it comes to liability, but the point is, is you don't want... You are just very uncomfortable keeping yourself attached to your spouse when it comes to filing taxes and what they may be doing on their tax return because you might not see their income. You might not be able to verify what exactly they're doing. And for you, it might be worth the extra cost or extra expense to separate your finances from them in that regard.

 

Now, there's a third category of reasons you might want to file separately, which I'm just going to call the other category. Some of these are technical or very specific and I can't get into all the details in this episode without boring you, but there are things I want to bring up so that you know that there are other scenarios in which you might want to file separately. Something like... Depending upon your tax situations, there are certain deductions, itemized deductions, that are limited by what's called your adjusted gross income. When you have two incomes or dual income or joint income, that might... you might not be eligible for those deductions later. But if you're a single person or I should say filing separately, then you might actually benefit from a tax perspective from that. There's a student loan question is sometimes student loans have repayment plans that are based on a person's income. When you have a joint income, your repayment plan might be a lot... might be more accelerated because your income levels higher. However, if you're filing taxes separately then your income is lower.

 

Another potential reason is for state taxes. Sometimes in some states, particularly in some community property states... If you don't know what that is, you should look up the term community property, but some community property states have benefits for filing separately. It's something for you just to think about. The main three reasons though, one is to potentially save on taxes. Two is to limit your liability for a spouse who may be cheating on their taxes. And the third is there are just some other reasons you may want to consider when it comes to your taxes. But here's the deal, I just want to give you that nugget because taxes are a super complicated area, but it's something that you should be thinking about and be aware of and have in your head is, "Hey, what's right for me this year? What's right for me next year?"

 

One last thing to bring up when it comes for timing and something for you to think about. If you get divorced on January 1st of 2019, you're considered divorced for the entire year. Conversely, if you get divorced on December 31st of 2019, you're also considered divorced for the entirety of the year and so you won't have the married election to choose from. However, if you get divorced on January 1st of 2020 you are considered married for all of 2019, which you were, and therefore you're going to have one more year of tax filing where you have to think about. Sometime in 2020 you're going to be filing your taxes for 2019, hopefully, and that's when the status is going to come into play in terms of what you need to be thinking about. Something to consider. Something for you to think about as you plan during the divorce process.

 

But the main thing is, is you need to get your own accountant during divorce. You need to, if you haven't before, talk to an accountant. Talk to someone who is not your marital accountant. If you don't trust that person or you're not... don't have a relationship with that person, at least for the year you're getting divorced and the year after, it's very wise to get some accounting help. Someone who can help you walk through and educate yourself, even if you just spend.




Jul 11, 2019

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. Learn about coaching services here.

As you go through the divorce process, one of the most important things that you can do that's easy to overlook is really understanding all of your legal documentation and reading it. Even though most of you going through divorce aren't lawyers, you should be able to read and understand the legal documents that are getting passed back and forth and that ultimately you'll sign as part of a settlement or if you got a temporary order from the court or whatever the case may be needs to, you need to read every word and you need to understand it. One of the things that I want to talk about in this episode is what kind of things you should be looking for as you try and read and understand and go through all of the legal elements of this divorce process.

Just one important note to remind you or as a reminder is on the divorceandyourmoney.com/coaching page, we have a call that you can schedule that is a document review call. It starts with, you send the documents in advance by email after you book the call, or we can arrange a method to transfer them, and then I will go through and read all of the key documentation, be it a settlement agreement or financial affidavits or whatever else, and then we discuss points of change and other things to highlight as part of that call.

In this episode, though, I want to go through three things that you should be doing as you go through the legal paperwork and the documentation in your divorce. The three things are, first, is to understand every word and sentence. Second is think about the what-ifs. Third is do what I call a sanity check, which is what does this mean to someone 10 years in the future?

I'm going to go through each one of these points and talk about them just a little bit for you. The first step in the process is to understand every word and sentence in your legal paperwork. I'm going to use the example of a settlement agreement because that's the one that also usually has the most text to it. It also has a lot of moving parts and the most subtleties when it comes to understanding the words that are in your documentation. I want to use that just for the sake of example throughout this episode is a potential settlement agreement that you're about to sign or you're thinking about signing, or you're in the process of negotiating and you're thinking about.

When I say understand every word and sentence, it means you need to go through literally every word and sentence and make sure that you understand exactly what it is saying. What I do with documents is I get my highlighter out, I get some multicolor pens, I go to a quiet place, and I sit and study the documents. I go sentence by sentence to make sure that everything seems alright to me.

Whenever a sentence sticks out, I give it a highlight. If... Sometimes, I'll just summarize each paragraph just in the notes of a page to make sure that not only did the words make sense, but I'm comprehending exactly what is being said in a particular sentence. Sometimes, I'll get to a sentence that, or a paragraph that doesn't totally make sense to me.

Sometimes, it just feels a little fuzzy. Might not be incorrect. I'm just not 100% sure, and I'll highlight and say, "Hey," and then I'll go back to either a lawyer or to you or if I'm talking with you is like, "Hey, what was the intention with this sentence or this paragraph? I don't totally get it," in which case there might be a perfectly reasonable explanation, and other times, they'll say, "Hey, we need to rewrite this paragraph to make it clearer just so everyone understands that we're all on the same page," but you should be doing that as well is you need to go by sentence by sentence to say, really, one of the main questions you should be asking is, is this is what I intended, does this make sense, is this clear, is there any ambiguity because we don't want to have any ambiguity in the documentation.

I had a case just recently where someone was doing a calculation for their retirement account. They put the formula that they were going to use for the retirement account in there, or pension plan, I should say, the formula they were going to use, but they didn't actually put the numbers specific to the formula. They said it was going to be a certain percentage over a certain number of years, and that's the formula we're going to use, to which I said, "Hey, let's go back to the attorneys, and let's actually just write in... you can say, 'Let's include the formula,' but we also need to include the exact numbers that we're using as part of this formula to determine the payout just to add some clarification to the document."

But anything that's unclear to you needs to be fixed, or if it makes you feel fuzzy or just doesn't quite match what you thought you were agreeing to, you should be looking at those with a fine-tooth comb and reviewing those.

The second thing to think about is what I call the what-ifs. You need to be thinking about all of the what-ifs. Divorce settlements are some of the most complicated in the legal world because in a divorce settlement, you have to try and think about all the different possibilities that may happen in the future. That's not an easy thing to do, but you need to think about those particular possibilities.

I'll give you one with the kids. If you have children, well, what if one spouse moves to a different county or is planning on moving to a different county that's an hour away instead of 10 minute away, or that's two hours away instead of 10 minutes away, or what if one child has a disability? How do you plan on handling that and paying for those usually additional expenses, be it tutors or medical things or whatever else.

Should a spouse be allowed to move away, and how would that affect the custody issues? Custody is a complex area, but it's easy to illustrate some of the what-if scenarios. What if a spouse, if we're talking about alimony or thinking about alimony, what if a spouse starts making double the income? What does that mean for the potential alimony or spousal support payments? What if a spouse loses the income? What does that mean to alimony and spouse support payment? Should things be modifiable or non-modifiable?

There are lots of things to think about when it comes to spousal support, or I'm sorry, when it comes to what-if scenarios, including spousal support or child support or just any number of things that life can present when it comes to the divorce process. One of the things you should be thinking about as you go through and craft a settlement agreement is for each particular topic, you should really be thinking about the what-ifs. What if this happens in one's life? It might not be next month, but it might be two years down the life. Is our agreement set up in a way that it's easy to handle and we have a process in place?

Another common thing that pops up is what if someone loses their job or what if a child gets ill? Let's just say there's an emergency, and you have to take a child to a hospital. Who's going to make those decisions real-time when there's an emergency? Those medical decisions that are all important and they're time-sensitive, how is that handled?

Those are examples of what-ifs that you should be thinking about in your divorce process, and in your life, as you read the settlement agreement, well, what if this happens, what if that happens? Look, like if complicated. You're not going to be able to cover every potential what-if scenario; however, anytime I'm looking at a settlement agreement, you gotta make sure the most-likely what-ifs are covered and how that might look. Usually, usually, a good attorney has those what-if scenarios or many of those what-if scenarios already covered in an agreement.

Oh, I'll give you one that is a popular one that I see less often than I should, but it's very important. Let's just say one spouse is paying spousal support, and the other spouse receiving spousal support, of course. Let's just say the spouse receiving spousal support remarries. Well, almost all the time in every state, just about, if someone remarries, then that spousal support is expected to end.

But what if that person doesn't remarry but chooses to live with someone for the next decade? Should that spousal support end? Many times, I would say yes, but the point is, is that needs to be written in the agreement in how you determine what the conditions are for the ending or termination of spousal support. To be fair to both parties is very important in your settlement documentation, and that's a what-if that people should be thinking about.

Now, the third thing to consider is what I call the sanity check. The sanity check is very important because... What is it? The sanity check that I like to call it is also just kind of, let's think about this in the future. Let's just say that five years from now, some random person who has no involvement in the divorce reads your documentation and has to make a ruling on it and say that, "Oh, well, you agreed to this. Does this make sense, or is this the way that you intended things to happen, and does it make sense for what's actually written in the document?"

Now, what did I mean by that? That was a little bit of a convoluted explanation. What I mean is, is oftentimes, and this is one of the most important things I want you to keep in mind, oftentimes, when you have a lot of context, when you have a lot of "your life" involved in the divorce documentation, you intuitively understand supposed to or at least you think you intuitively understand supposed to happen as part of this divorce agreement given that everything's fresh.

But what if a few years down the line, going back to that what-if, what if there's a dispute, and one spouse wants to take the other spouse back to court or back to the lawyer's office and say, "Hey, this issue isn't being upheld correctly," or, "It's not being handled properly," or, "I want to modify this particular clause." Well, 10 years from now, if someone's reading this documentation, or five years from now if someone's reading this documentation, is it very clear as to what exactly you agreed upon, and would it make sense to someone who has no context other than just the legal documentation?

I'll give you a case that happened to one of my clients I've worked with for several years both during and after their divorce is their spouse, or ex-spouse, I should say, did not make any kind of, the ex-spouse had, for several years, not been making a specific payment that he was supposed to be making. This payment was a monthly payment that he just never made. It was... and after several years actually owed my client quite a bit of money.

Now, the good news was we went back to the documentation. We looked at it, and we looked at the exact wording, and it was very clearly spelled out and exactly what was supposed to happen. We went to the bank statements. We gathered up the receipts, and said, "Hey, ex-spouse, you owe us many thousands of dollars because we haven't gotten this payment you had supposed to have been making," excuse me. We were able to get that resolved.

But other times I'll look at documentation where someone calls, and I'll read the documentation, and I'll say, "I'm sorry. I get what you're missing, and I understand what you're saying, but the legal documents that you signed, that you and your spouse signed don't quite say that. It's hard for me to understand what exactly is supposed to happen here in terms of how this all works and what you're expecting to happen. I get that it doesn't match what you agreed upon, but you signed this paperwork that said this, and now you're trying to challenge it." It's going to be hard to prove later down the line.

The point being is for every part of the divorce settlement that you read, make sure it's clear, and make sure to be clear to someone who knows nothing about your case many years in the future so if there's a dispute or if something arises, the solution, so to speak, is already in the divorce paperwork, and it's very clear for everyone who is involved.

Those are the three things when it comes to understanding your documents. The first thing is, one is review and understand every word and sentence in your documentation. The second is think about the what-ifs, all the potential scenarios that could happen, and try to address as many of the most-likely ones as you can in the divorce paperwork that you're trying to figure out. The third is do your sanity check, is think about this agreement you're about to sign from the perspective of someone who knows nothing about you, or let's just say a judge, 10 years into the future. If there's an issue, will this paperwork still make sense to the person who's not involved in the scenario, and how might think they about the issues that are being presented.

Also, just one last thing, as I said, is one of the most popular things I only recently launched in the past year is a document review session where we can get in-depth in the documentation that you're looking at as part of your divorce. One of the most common things people ask, and honestly, I say divorce isn't, clearly, is not a fun process, but one of the most fun parts for me or one of the most enjoyable parts for me is reviewing the settlement agreements and thinking about the different scenarios and trying to figure out ways that we might be able to make one section better or improve a section or alter a section so that everyone is happy and we can get this down the line and make sure that there's no unclear area. You can book a document session review with me as well. I do many of them every week, and they're one of my most famous, or most favorite, I should say, parts of this process to review as well.

I hope you found this episode helpful, and talk to you soon.



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