Welcome to another episode of the exEXPERTS DIVORCE etc… Podcast where we give you all kinds of information and tips on everything divorce. Why? We’ve lived it, so we get it! We’re T.H. & Jessica.
T.H.: Welcome, everybody to today’s Divorce etc podcast. We have four of us on our show today. Including Jessica, we have Catherine and Karen, both from My Divorce Solution. Their tagline is ‘We help you secure your worth and protect your wealth’. They bring the legal perspective to it and financial perspective to the whole process of divorce. Plus, they’re real-life experts. Welcome to our show today ladies.
Catherine: Thank you. Thanks for having us.
Jessica: We’re so glad you’re here. We are huge advocates of financial literacy and people being able to take control of their financial situations. You guys have such an important message. We really appreciate you bringing it here.
T.H.: We are going to talk about financial landmines. Anybody who’s not comfortable with finances, everything’s a landmine, right? Everything, like figuring out how to even get into your account is a problem. Take us through the process. I think it also really helps that you guys have been through this on your own in different ways, as we have. We all have very different stories and perspectives to share. But I’d like to hear what you in your experience of working with people, what are financial landmines? Let’s define it, and then let’s name some of them.
Karen: I just want to qualify something that you said right out of the gate, where you said we provide the legal perspective. I just need to qualify that neither Catherine nor I are attorneys. While I have 30 years of legal experience as a paralegal, I’m not an attorney, nor do we give legal advice. However, our experience allows us to really provide that financial clarity supported by documents that are required when you’re going through the divorce process. I just wanted to make that clear.
Jessica: No, that’s important to know. Listen, we don’t want anyone listening thinking that listening to our podcast is the end all be all of what is legal, or they shouldn’t be consulting with a lawyer. Thank you for the transparency.
Karen: Absolutely. Attorneys are very important in the divorce process, especially when it comes to protection and enforcement. But we hope to get clients set up with their financial data and documents so that they can make really good financial decisions for themselves so that when they go to their mediator and or attorney, they’re ready to go. They know what they want. They know why they want it. We believe the first landmine that people face when going through–
Jessica: Oh, Karen, your audio just cut out for a second. The first landmine was what?
Karen: Access to your documents. Can you hear me now?
Karen: Are we good? Okay. That’s one of the biggest fears is where do I find the documents? What are they? What do they mean to me? Some people have very limited access to their documents. I don’t know if either of you experienced that, but there are many people who have not participated in their family finances, and they don’t even know where to start. Part of our process is helping you understand what you need and where to get that information.
Jessica: I didn’t have a lot of access. I wasn’t blocked from having access, but it just wasn’t something that I really dealt with all that much. I really just let my first husband deal with it all. I will tell you, down the line, years after we got divorced, when it came time for me to buy my first apartment and we were going through the contract negotiation part, my real estate attorney was like, by the way, there’s a lien against you. I had to have him pay off a lien that my name was associated with because of something from the time that we were married. So yeah, it’s scary if you never do anything, I will say in my second marriage, I kind of managed the finances. I was very in on it. But it is scary when you really don’t have access and you’re just letting somebody else deal with it. It’s like you’re signing papers, oh, sign here, sign here, and you’re like, okay, and you have no idea.
Catherine: Well, when getting access, everyone says, well, my spouse will give me the information, because they feel, like you, they haven’t been involved. And so now what they end up doing is missing this great opportunity, that when the divorce is first introduced, we call that the honeymoon period. Everybody’s saying, I’ll take care of you, everything’s going to be okay, and I promise to be there for you forever. Well, that’s the period that you want to ask for access to that documentation. If somebody’s saying to you, oh, we’ll take care of you, I’ll take care of you, and I promise, well then show me the information I need. If you’re really saying that, stand behind what you’re telling me. To avoid this first landmine, we help you communicate that to your spouse. We help you not to miss that opportunity to grab everything you can, take pictures of anything that you see so that you are more prepared moving on to the next–or I should say avoiding the next landmine. When you talk about that lien scenario, a lot of times we give considerations. Because you’ll see somebody who if they have a lien against child support from prior marriages, that’s going to come off that closing sheet when you go to close on that marital home. You have to make sure you’re not responsible if that’s not a marital lien. There are a lot of things that can come up there. We point that all out in the considerations when we’re talking about selling a home because that’s something very important.
T.H.: No, that is really important. You might think that you’re involved in the finances, but whatever, he didn’t tell Jessica he had a lien–
Jessica: I want to clarify–
T.H.: Was he being sneaky or not?
Jessica: No, no, no. It was a real estate investment that he had made several years prior when we were both married. I knew about the investment. I mean, I just wasn’t involved in the specifics and the particulars. The truth is I had rented for a number of years after we were married, so I didn’t know about it. I don’t think that he was trying to hide it. It just was out there, and it just wasn’t really relevant. It hadn’t stopped me from doing anything else. But when I realized from my lawyer that it was going to prevent me from being able to move forward with this apartment purchase, I was like, you better get up off your ass and pay this down, because you’ve got to get my name off of it. And he did to his credit. It just was the kind of shit that can come up that you don’t think about, and that are consequences from things that you may have participated in, even not actively, when you were married.
T.H.: Did you have a honeymoon stage, Jess? Did you have a honeymoon stage like Catherine’s talking about? I think I definitely did, now that you bring it up.
Jessica: I think I did and I–
Catherine: And you missed the opportunity, right?
T.H.: No, I didn’t. I mean, there was like Pandora’s box opened up and genies were flying everywhere. It’s just that there was so much information. I had full access, but I just turned my head away. I took care of the kids, I had a job, and he was going to take care of this. But he was in fact covering up. When I told him that this was over between us – oh, let’s get us in a new house. I’ll put in stereo equipment. He’s walking around the house with me thinking he’s moving in. I’m like, you can put up all the TVs you want, but you’re never watching a single show on them. There is definitely a honeymoon stage. Catherine is 100% right.
Jessica: Jump on that.
T.H.: There was a time when he was like there might be a chance she’s going to forgive me. In my head, I’m like, I’m so out. I’m just going through the motions here. So, definitely take advantage.
Catherine: Let me point out the landmine you two just went through that you probably didn’t even realize. Jessica, you were very outward saying, no, no, no, I knew about this investment, blah, blah, blah. But before you said that, you said when you went to closing, I didn’t know there was a lien on the account, which led T.H. to say, hey, Jessica, do you think you missed out on this? But you two just communicated, you just defended that, no, I knew, and what have you. The beauty of what we do with a financial portrait is the conversation we hear between the two spouses. We’re able to notate that. Otherwise, what would have happened, and I’m sure we’re all going to agree here, T.H would have gone to her attorney and said, hey, he never told me about that. I never knew that blah, blah, blah. If he hid that, what else is he hiding? Where you’re saying, no, I never had–she knew we had those investments and blah, blah, blah. But the two attorneys don’t communicate that. They say what else are you hiding? We need this. And we’ll go subpoena that. Because you were able to do this in front of us, that’s how we avoid a landmine of access and data, because we’re able to listen to the two of you. Karen knows a ton about real estate, so she would have asked about some closing documents and what was included. Then we would have notated that we requested X, Y, and Z from husband when he did this closing, and we have not received it. Now when you go to an attorney, all they need to do is ask for that one documentation. So we just really roleplay this without even trying to roleplay it. Imagine how many times this happens. That’s why people pay a fortune with attorney fees.
Karen: I love it. I love it. I have two mini-stories to tell, one from my own divorce. My husband had his own roofing company. We were young, so I was vice president. Sounds pretty cool, right, because we’re married and I’m vice president. We get divorced, and we forget who was president and who was vice president. Imagine my shock after the divorce and getting papers because he filed bankruptcy, and now I was responsible for the debt for the business.
Jessica: Wow. I think we can all agree that, yes, that kind of thing probably happens way more often than any of us would think. That is so scary.
T.H.: So what did you do?
Karen: I had to hire an attorney to navigate through the whole thing. He had to take on that debt. But it was more attorney fees, and it was more litigation, for something that neither one of us thought about. So again, in the honeymoon stage, when you’re collecting documents, if someone has a business, or if someone has the assets of whatever it may be, you need to make sure that you’re collecting the documentation that indicates who owns it, how they own it, what happens when it’s dissolved, etc, etc. The other thing I want to say is a lot of people think that they do not have access to their tax returns. It astounds me. I must have this conversation five times a week. Well, I filed a joint tax return, but the accountant says they gave the password to my spouse, and so I’m supposed to get the password from him. Or they mailed it to my spouse, and I’m supposed to get it from him or her. Guess what, you signed the tax return, so you’re entitled to your own access and your own paperwork for that tax return. It doesn’t matter that it also got mailed to the other person. If I want anybody to understand anything, it’s that you have access to your own documents.
Jessica: It’s so important, and I mean, this is a topic for another podcast, but it’s such a shame that we are in a situation where we all know of so many women, and millions more that we don’t know, where we feel like oh, could you just give me the password? Could you tell me this? The fact that we even have to fucking ask for access to our own financial records is a whole other part of the problem.
T.H.: Asking permission for anything is a problem.
Jessica: Yeah, ask permission for me to see my own freaking bank account where my money is going? And that we have to be in a situation we have to worry about our soon-to-be-ex playing games and not giving us the password, or do I need to look it up? Just whatever, dragging that shit out. I mean, it can make someone very angry.
Catherine: Frustrating. Yes.
Jessica: Yes. What are some of the other landmines?
Karen: Next, go ahead, Catherine.
Catherine: The next one is understanding the components of your assets. It’s very easy for someone to say, I’ll keep the annuity and you keep the house. Well, when you’re looking at that annuity, do you know what the components of that annuity are? What do they consist of? You can have a surrender fee in that annuity. You could be giving up a living benefit that guarantees you a death benefit, or that guarantees you a living benefit. You could have purchased that annuity because it’s going to supplement income as a married spouse, but now that you’re getting divorced, will you lose that if you take a portion of that because a new contract has to be created if you take it? Or are you negotiating away too much of the cash account, because it’s not really equal to the tax deferral basis? What’s the tax-equivalent yield to those two investments? You really have to understand not only getting that documentation but what are the components to every asset and every debt? Like, your student loans, did you acquire those before your marriage? Or did you acquire that loan during your marriage so you can further your education? So is that marital or not? Before you say, oh, okay, that’s my student loan because I just got this nursing degree, so I’ll pay it. No, that could be in marital debt that you both have to pay, because it’s an education that you got to enhance the income for your family. Understand the components of every asset and every debt before you negotiate away anything.
Jessica: I just want to say for anyone out there listening, the description that Catherine just gave is exactly why we’re doing this episode. Because I know that I cannot be the only one who was like, I don’t even know what an annuity is. There are complex terms and complex explanations for things, or at least we think they sound complex, and they may not be, but this is why it’s so important for you to know what you have in your financial portfolio with you and your ex and be able to really understand what you’re getting or what you’re giving up. It’s almost like you hear all of what sounds like complicated talk and you just want to like lay down and put your head under the pillow and be like, it’s too much for me to deal with. I just don’t understand it. But you guys, we have to understand it, because it’s the only way to be able to protect ourselves. This is why you need people like Catherine and Karen to be able to help you navigate what your situation is.
T.H.: Right. And also, in the effort to move forward, knowledge is power. If you’re not going to take the knowledge, you’re not going to have the power, and you’re not going to move forward in a productive way. That’s for anything, like any information you don’t want to know. I don’t want to hear it. I don’t want to know about it. You know what? You’re only hurting yourself. What we have created here from My Divorce Solution and exEXPERTS is a whole tremendous robust resource of everything that will help you move forward. Consume it in little bits if you want. It is overwhelming all at once, especially financial stuff. There has to be a financial Book for Dummies. I would 100% buy it. I’m in. I’m proud to say that book’s for me, but there is a book for you, and there is a lesson for you. So like Jessica said, and these ladies are saying, knowledge is power. You can’t be upset if you don’t get what you want and what you think you deserve if you’re not going to learn about it.
Jessica: That’s right. That’s right. Okay, so what are some other financial landmines that people need to know about that we’re not even thinking about?
Karen: The next one, I’ll take, is the interpretation. Once you know what makes up your marital estate, and a lot of people say, well, that’s my net worth statement. Okay, that could be, but getting divorced is much more than a net worth statement and knowing what that is. It’s also knowing what every asset and debt on that net worth statement means. The interpretation of, like Catherine was saying, the annuity, the interpretation of the family business, or the interpretation of a 401k account. Are there loans on that account? Was there pre-existing value to that account? Understanding what every single thing means as it translates into divorce, not just how it was in your marriage, it’s a very different language as you move towards divorce.
Catherine: And to add to that, if we talk about T.H.’s example earlier, her ex wanted the TVs in this room and TVs in that room. Well, you’re sitting in your head, maybe not verbalizing anything, sure I’ll take it, but you’re never going to watch a show on that TV. How are we interpreting what his generosity in his eyes is compared to what it really means to you financially moving forward? I always, again, when we have these conversations, so you’re putting the TVs in that room, what is the benefit for that? And where’s the money’s coming from to get those TVs? Because how do you know you didn’t buy those TVs yourself with your half of the marital assets? There’s a lot of stuff going on there that you may not think of, and they’re thinking they’re being generous when really they’re using your money. I love when we hear from one of the spouses, oh, no, we got this and blah, blah, blah. Okay, well, guess what, if you didn’t get that, that $50,000 would have been in your pocket. You get to choose whether you want to buy that TV or not.
T.H.: Right. And it’s actually way more complicated even than what you’re saying. In my situation, I was happy to take the TV, because it was just nothing compared to everything else. But yes, you have to look at the whole picture, and it’s probably coming out of your pocket.
Catherine: Right, exactly.
Jessica: Go ahead, Karen.
Karen: Not knowing the interpretation is a landmine, because it’s not 50% of the value of a house, it’s not the same as 50% of the value of a 401k, and it’s not the same value as 50% of the cash account. You really need to understand the interpretation of those documents and what they specifically mean to you and your portion of the marital estate. That definitely is a landmine. We often talk about even splitting investment accounts or retirement accounts. If you split them by dollar value versus shares, that’s could be a huge discrepancy that a lot of people would have no idea about.
Jessica: Do you have a rule of thumb in general, like it’s always better to default to splitting by dollar amount versus it’s always better to default by splitting shares?
Catherine: No, because you need to know the components of every asset that you’re talking about. Remember, when you want to transfer shares in kind, that’s because you’re trying to avoid may be a tax basis discrepancy. However, maybe you’re in a position that you should let the taxes go to your spouse because you need the cash to move forward, or your income differential is so large, so maybe you should take the tax loss but negotiate to get more money because you won’t pay the government as much if it’s getting taxed at your bracket versus your spouse’s. But guess what, if you’re giving that up, what should you get in return for that? It’s really again, considering everything with every asset and every debt, it also goes for loans to people. How do you know whether those loans are actually going to get paid off? Listen to Karen’s experience from when she was really young. Her ex went and filed for bankruptcy. Maybe she gave him credit for whatever debt they had, and then he went and got it forgiven because he filed bankruptcy. Now you’ve just screwed yourself because you didn’t have the awareness that you need. And so what we’re about–we’re about giving you that awareness so that you make the smart decisions for your journey. We’re not going to make those decisions for you, but we’re going to point out all these little landmines along the way, and have the really tough conversation with you and your spouse, and then you get to make that decision for yourself.
Jessica: I have a couple of questions all at once. I mean, I’m curious to know the landmines that you’re bringing up, are these landmines everybody that needs to be aware of? Or are these specifically the most common things that you see with your clients? Then you just said, Catherine, something about sitting down with you and your spouse. Is working with My Divorce Solution a process where I would have to come in with my significant other or soon-to-be-ex? Or could it be just I’m coming in and saying I need the help? And how long is that process to get the clarity on whatever my situation is?
Catherine: Lots of good questions. Karen, do you want to take them?
Karen: Okay, so the first one is, are these the only landmines?
Jessica: Yes. Well, it’s not that are they the only landmines, but are these specific things that you’ve brought up the most common issues/struggles that you see with your clients? Also, your audio got a little low?
Karen: Oh, can you hear me now?
Jessica: Yeah, anything you can do to make it like–
Karen: Alright, I’m just going to sit right on top of the microphone. Okay, so these five landmines that we’re covering today, most situations in the division of assets fall in one of these categories. So while we could talk about access to documents as a landmine, and we probably could talk about that for hours, most situations fall in one of these categories. The second question was–
Jessica: Is it always like a package deal? Do I have to come in with my soon-to-be-ex?
Karen: Nope, you can, but usually it’s one spouse or the other that comes to us. Sometimes they will invite their spouse to share documentation and beyond the contract, or sometimes the disparity between their financial knowledge is so extensive that we usually say the monied spouse or the spouse that has been in charge of the family finances would just participate. You can come in a variety of ways. The intent is to gather as many documents and data as possible to help the person or the couple have the most financial clarity so that you can make really good informed decisions.
Jessica: How long does the process take working with you guys on average?
Karen: We work at anybody’s pace. Some people work slower or faster than others. It is important, however, that when you start with us, that we move pretty quickly because divorce is very relative to the most recent documents you have and their evaluations. We tell people when you’re ready to go, let’s go. We can be completed in a little as eight weeks, I believe. Right, Catherine, our whole process? Yeah, some people take a little longer than that, but you do need to keep it to a finite period, and you do need to be ready to go. That’s why we have broken down our processes into very segmented, structured steps, so you don’t get overwhelmed. You have your team right there to support you and help you along the way. We’d like you to be engaged as much as possible, because to your point, I think T.H. you said it’s important that you know. It’s important that you take ownership of this, and you be educated. And so you’re not going to be educated in 24 hours, but participating in this process not only gets you clear financially, it also educates you, so that moving beyond divorce, you’re much better equipped.
T.H.: I hired a forensic accountant to help me through my process because a lot of stuff was unknown to me. Are you guys a replacement for a forensic accountant? How does that work?
Karen: We’re not a replacement. A forensic accountant typically looks at the dissipation of assets or calculations of who spent what, where, and when, right? But he needs or she needs a fund of information supported by documents, right? So does your attorney, so does your accountant, so does your realtor, and so does any divorce professional working with you. Our role is to help you collect the data, support it with the documentation, help you understand the components, the interpretation, the options that you have so that any of your professionals are working from the same fund of information. It’s all relative to those documents provided to them. You’re not paying your forensic, you’re not paying your accountant, and you’re not paying your attorney or mediator to do the same work three times. Because they all do it, right?
Catherine: I’m going to jump in here for a second. It’s interesting to us because when we’re setting our clients up for whatever professionals they need along the way when I hear that we hired a forensic, as a CDFA and somebody with an accounting degree, I always wonder what you are actually getting this forensic for. There is a very small percentage of people that actually need a forensic accountant to do this job. Some of the tracings of funds can be done with regular planners within our portrait. When we go through this process, we say what actually are you having the forensic work for? Then we can pinpoint that and make sure we work with that forensic to provide the data just for that. There’s no reason to pay for something that you’re not actually looking for. We come around and give you the awareness of everything that you have and what you’re going through and what you’re actually asking this forensic. I can’t tell you how many forensic reports we get to look at, including our portrait, and we say what did you get out of this? And they say, we don’t know. We don’t know. We’re still questioning this stuff because they start there, but it’s not really the path that should be taken in the beginning. It maybe should be taken when we’ve given both sides the opportunity to really discuss it or to get to what we’re actually getting to.
T.H.: That would have been extremely helpful for me at the time, because I hired my lawyer, and then she said you need a forensic accountant. That’s how I ended up with a forensic accountant. I didn’t know I needed a forensic accountant. I just knew that there was a significant amount of lying and deceit, and so there was probably other stuff behind it. And actually, what was uncovered, which you ladies may have uncovered, was the opportunity to have a lot of money come in, which has now supported my three kids through college. That I would not have found on my own just by gathering documents. But I think that everybody really needs to hear what was just said. Because I just took the lead of my lawyer, hence, I spent four years getting a divorce and a gross amount of money and to have had most of that stuff done by your team. By the way, I wasn’t educated on what was in it. My forensic happens to be a fantastic professional and did take the time to educate me, but that’s not his job. He’s my accountant today because he was living it all with me, and I feel like he’s got my back. I call him for stuff and he’s like remember in your agreement this and that? I took one of my team with me. But it’s what the lawyer told me to do, and not because I knew better.
Catherine: Right. It’s not an explanation of why you needed it. Sometimes that creates another landmine because now your spouse who was just buying TVs for your house that could have been beneficial to you is now pushed against the wall because you’re already threatening his trust again or what have you, where maybe we could have just asked him for it. Some of it he would have given because he had to give it anyway at some point. It’s just a matter of–
T.H.: You’re giving him the benefit of the doubt, but I’m sure that is the case in many situations.
Jessica: Look, I mean, there’s so much more to discuss. I feel in some ways we’ve barely scratched the surface. But the bottom line is that for everybody out there, they need to know there are different options and different ways to approach your process and approach your divorce. You have to do what feels most comfortable to you. But you also have to know that there are people out there like you guys. The knee-jerk reaction doesn’t have to be to get a forensic accountant or be in the dark about what’s going on. That’s why we love what you guys are doing because it really is all about helping people through in a less painful, easy-to-understand way that has long-term benefits. As we’ve already said several times throughout this episode, the idea that learning what someone would learn by working with you through the divorce means that they’re going to be better off if they ever get married again, or just moving on down the line, knowing more about their own financial situation.
Catherine: Let me back up what you’re saying there because it’s really important to know that, and it’s actually a landmine that we probably should start with, and that’s compromise. Whether you’re happy about the divorce, whether you initiated the divorce, whether you’re sad about it, whether you’re pissed off about it, whatever your emotions are, they’re legit, that’s fine. But the one thing you need to know is that there’s a compromise in divorce. Both sides of this fence are going to have to compromise on something. If you understand what your options are, you’re able to make compromises. If you can start your journey knowing that you have to compromise, you might benefit in that honeymoon phase where you can access your data. Then you’ll be able to understand the components because we’ll interpret them with you. Then you’ll know your options and you’ll compromise to move on to that life you’re talking about. That’s the best way to do it. You know you’re going to compromise, but just figure out the awareness that you need to do that.
Jessica: Yeah, totally. Well, that’s a perfect way to end this. We definitely are going to want to talk to you guys more and do more with you. But for everyone watching, or listening, whatever, on our website, the exEXPERTS website, you’ll find on the expert’s page: Karen and Catherine, all about My Divorce Solutions, their information, how to contact them and work with them. Feel free to send me questions. We can always pass all that information along. Thank you ladies again so much for joining us today on such an important topic.
Catherine: Thank you for having us.
Karen: Thank you.
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