Divorce is a major life event that forces a change in your financial plan. Managing Director Dennis Bielik, CFA, CFP®, FRM from TCG Advisors and author of Money Management Mindset: A Guide to Help You Prepare for the Expected and Unexpected addresses:
- Financial assets that can be affected by divorce
- How divorce financially affects women
- How divorce financially affects men
Regardless of how you feel about your new marital status, planning is crucial, and you don’t want to miss this webinar.
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Watch the video here:
Transcript
Jessica: Welcome, everyone, and thank you for joining our Upside Avenue Educational Webinars Series. This series is developed with your input. We’ve surveyed our investors and followers to find out what financial and investment topics everyone is interested in learning about. And then we look for subject matter experts all over the country who can speak on these topics. Our hopes is to provide you with the knowledge and confidence to help you discover your Upside. So, watch your email for next month’s webinar information, and we’ll also be sharing it on Facebook, Twitter, LinkedIn and now Instagram. So, today’s topic is a particularly sensitive one, and I can’t think of anyone better who can address the financial impacts of divorce. He recently released a book. His new book called: Money Management Mindset, a Guide to Help You Prepare For the Expected and Unexpected. In 2019 he was named one of the top advisors nationwide by Financial Ta-Times, and this year Forbes named him as a Best in State Wealth Adviser in Texas. And when he’s not helping his clients in his role as managing Director of TCG Advisors, he’s sharing his experiences with younger financial planners and spending time with his wife and daughters in Austin, TX. So, help me welcome. Dennis Bielik, Dennis welcome, thank you for joining us. How are you doing?
Dennis: I’m doing good-doing good. Thank you for asking by the way and appreciate the introduction.
Jessica: Yeah, we’re looking forward — I mean it is a sensitive topic and I know that you’ve had, you know experiences dealing with this with your clients, so, you know I’ll turn the time over to you.
Dennis: Well, I appreciate that, and you know you’re right in this fact that this can be a sensitive topic. Just, just like others right now that we’re going through as far as like health issues, you know, different aspects of life. So, you know real quick, just kind of starting off with the book. You know what we talk about in the book and I always find that this is a good kind of introduction to any topic that we discuss is, you know, if everybody had played the board game of Life, I always think that’s kind of the best introduction to financial planning or live planning that’s out there. And if you remember the board game of Life, you start off at a point in either you can go to college or you can you know, start work right away, but eventually everybody goes to work. You choose your career, you end up buying a house and if you remember, you can overpay from the big mansion right away.
Or you can kind of take that home that’s like split in half – very, very cheap. That’s like falling off a cliff. But there’s different points in life where you get married, you can have kids, you gotta buy insurance and if you remember going along the game of life, there’s different points in that game that set you ahead. Where maybe it, you know you benefit from a certain stage in life or certain step in the board game, or their steps that set you back. Unfortunately, today we’re talking about a crucial point in life that will cause people to have to take a step back. You know, typically when we’re going through these kinds of topics like divorce — it’s hard to really see a winning side in a divorce when it comes to finances, and, so, what we want to do is say OK if you are going through a divorce or have gone through it, but you don’t understand what to do financially or how can impact you is what are some key things you can do to help get a grasp of where you’re at, where you need to go, and how do you manage that-manage your life accordingly to this to this point.
So, first thing we want to talk about is” there are two different ways you know you can go right which is — and I mean this in a very laid back way, but you know you can go kind of an emotional route or you can go a logical route with it. There’s no way around it any-any topic like this can be very emotional. And, you know, depending on what side you are of the divorce, you know it can lead you in a couple of different paths. But what we really try to do when we sit down with people going through this is we have to consider a logical approach to it doesn’t matter who’s right or wrong in this doesn’t matter if it’s happening, it’s happening. How can we take a step back and look at it from an outside point of view and say how can we make the best thing for you? Happened throughout the divorce and a lot of times emotions control the divorce process, which can be the most costly part of it if you let it happen, which is you could allow a divorce to carry on.
You could go after for more than what you know could be agreed upon very easily, which then increases your legal fees, increases your court costs a lot of different things can add up to this point, which is why, when you go through a divorce, most individuals only retain an average of 40 to 45% of their assets because of the fees, right? So, the initial mindset is we go in. It’s 50/50 and you look at what happens in most cases. If it’s not amicable between the two spouses right away when they start getting to the asset splitting point because of fees because it costs and will talk about risk that people lot of people have, which lack of liquidity is you end up giving 5 to 10% of your piece – due to this process and that’s really what we try to help clients avoid — is-is how can we get 50 maybe a little bit more and we’ll talk about ways you can do that but. How do we make sure we’re not giving up a piece of our pie because of unnecessary things that maybe we could have avoided? And when you use this number and we’re talking about 10 to potentially 20% of what you would keep after divorce. When you look that you’re giving up 10 or 20% legal costs to other-other fees, that unfortunately it is not a great number, right? We don’t want to end up with 80 or 90% of what we were expecting. We want to try to end up with 100% that that’s the first goal there.
But when we get to a divorce, what is the hardest thing that people do well normally in a relationship, one person does the finances I mean very rarely do we ever find a relationship where people do finances together. And like I use my relationship with my wife, for example, you know anytime I talk about the budget or budgeting, you know she calls out to be work at home. She doesn’t call, it’s not-it’s not a friendly conversation to talk about. Hey, here’s how much will income we have. Here is how much can go out? You know we need to make sure we budget this. We limit this it that’s a hard discussion to have. And normally one person is in charge of it. Either way, whether you’re in charge of it or you’re not, this is the first thing you have to do because income and expenses will change irregardless. Whether the other person who is the supporting spouse. If, for example, one of you works, your expenses are going to increase. It is what it is, and if you are the other spouse, your income may decrease. Now if you both work, it can depend on who makes more money and what the situation looks like. But if you’re having to pay solely for your bills, the place to live those kind of aspects you know, unfortunately, that will change. And as we go through these different steps and look at them, a T chart, and will show you an example here on the balance sheet piece, but a T chart will be your best friend for the budgeting piece, which is you need to know what your income is. You need to write down every single expense and a lot of times where we see people make mistakes is they look at this as a one-time practice and it’s not our pass or fail, but it is a-it is an ongoing practice and you need to run your budget like you would have business need to run your balance sheet like you would a business and you need to run your investments in the other aspects of your plan.
Like a business and what I mean by that is you need to check it monthly. You need to see did I spend more than what was coming in and I know we talked about this in other aspects but it’s really important coming out of a divorce because this is a really big important point in your life where you have to start over on the financial aspect. Your financial plan. Even if you had one before it has completely changed. And just like any business, if it’s split into two you gotta figure out where your business is and where it’s going to go. So, the first thing we encourage people to do is. Take a budget down see what you think it will be, but then you need to benchmark it by saying how did we do this month that we over-spend? Do we not spend enough, you know, can we save a little bit more? What are the things that are working well? What’s not working well? And really have that conversation with yourself month to month. Once again it’s an evolving plan. Things will continue to change One-time expenses will change. It’s not going to be easy, but it is something that you have to do. The second step is you have to make sure you have a balance sheet going it. And the reason this is important is there is different assets that people will want in a divorce as well as different debt. That’s going to impact a divorce as well. And whether it’s your balance sheet going into a divorce or your balance sheet coming out of it of course you need to know what your assets are versus your debt, and if you’re debt, always your assets. Once again, then we need to take a step. Back to budget and make sure that we have cash flow positive so we can start paying down that debt. To make sure that we’re increasing the asset side of the balance sheet.
The other important thing, and a question we get all the time is: what is the biggest mistake you see people financially going into a divorce and that is what we call liquidity. A lot of people in you know I live in Texas and Texas, people view a home as an asset and maybe it can be that depending on how-how you invest in homes. But the problem is-is, typically in a divorce, people don’t want to live together afterwards. And a lot of times if you are going to split 50/50 or 40/60 or however works 40/40 ’cause you have too much in fees, a lot of marriages have most of their network tide into that home. Well, you can’t split it. You have to either figure out hey you take all the liquidy. I’ll keep the home or you have to sell the home. Which once again in Texas you’re usually looking at 6% sales Commission. You’re paying, you know real estate agent, come in and run that side for you. So, liquidity is the biggest thing and if you can plan and make sure your liquidity is strong before you split and you have a plan for that, that will be the biggest key to making sure you can have an easier split in the in the divorce where somebody can fully keep that home. Versus having to sell at home, and we see about one in three divorces where the home gets sold. So, it’s actually more common than you think, and lately we’ve seen it about more a little bit more than 50% going through this process. There are other illiquid assets out there. For example, if one of you is a business owner. That’s also something is very important, and when you look at a business owner from the standpoint a lot of times what they want to do is maintain their business control. And not have to give that up, which once again becomes liquidity. If they don’t-if they can’t do that and there’s not enough liquidity. Now they’re going to have to split that business up somehow, or maybe have to fire sell some of these investments like a House, car, retirement accounts or taxable investments.
Maybe I’ll have you know, rental home or business interest. It can be pretty daunting there, and so that’s where if you can map out a balance sheet and plan ahead and give yourself some time to get there. You can also view what you want in that relationship in the best divorces we see are ones where they have actually planned this out before they get anybody else involved, and I know that’s hard to do, sometimes you need a mediator, but if you can have somebody come in or-or if you and your spouse can sit there and map out the balance sheet and map out, here’s-here’s where we can agree upon and you have the liquid and you can build that up and start planning ahead. It makes it very easy to now have a 50/50 split. Once you bring you know the legal aspect into it and keep it very, very short and that’s really what we want to get to now. Once again, emotion takes control in a lot of these cases, but that’s where eventually you know. We encourage people do the balance sheet yourself on your side. Approach the spouse about it and hopefully you guys can come to a logical conclusion, not an emotional one which allows you to leave with more of your pie rather than less. Now, a lot of the questions we get on the budgeting is what’s the easiest way to start a budget or start a balance sheet for you to look at? And when I was in accounting in college, you know my professor always said your best friend in accounting will be a T which is a T chart an where you look at. This is if you can go on a piece of paper or Microsoft Excel for example and we see we see people build out balance sheets or budgets all the time in Excel, I’m one of those people, but you simply just draw a line and then you draw a line across and what you can do is you can do your assets on one side, label them out but the value. And then you can also do your debt on the other side. And once again, you put it kind of negative numbers here, but it’s good for you to do this no matter where you are in your life. What stage you’re at. This is something you should always do at least once a year on a balance sheet. Now I encourage people to try to do this once a month. Make sure nothing’s changed. It’s always going to update your mortgage has gone down.
You know if you have credit card debt, you’re paying it down. You know your equity in your house is gone up your investments maybe have gone up, or maybe have gone down, but continuing to update this allows you to see where you’re at and then allows you to help plan for where you’re going. You can also use this T chart for budgeting. And that’s where once again you can sit there and draw the T chart. You can put your income on this side. What’s coming into you and then? Also you can put your expenses on this side. What’s going out? And this is where, you know, once again, you have to start here. You have to get to this point because this is where you can see what life’s going to be like in a divorce – after, and a lot of times we see people go through divorce and they don’t plan financially till afterwards. And you know, we see this a lot on the non-working spouse: they take the house and don’t give up the liquidity, don’t give up the investments, they’ll give up their retirement account because they don’t want to move. They don’t want to-they don’t want to take the how — or I mean they don’t want to give up the school district, whatever it may be. However, the problem is now we can’t afford the house. And if they can, it’s-it’s very little, and, so, we end up seeing a lot of people a couple years down the road having to sell a house that that were in that two out of three that could keep it a couple years down the road. They end up having to sell it, which is where I get to that 50 to 55% number that I mentioned before. And this is also where you need to look at — with the assets versus the debt, and then also my income versus expenses, what makes the most sense for me? Because if I can get the investments even start generating income off the investments that helps supplement wherever we’re going to be, and you may have to downsize the House.
You may have to-to look at moving, but in a lot of cases it can make a lot of sense to try and give up the house for the liquid ITI if the other spouse is willing to give it. So that’s always something to consider, but if you were to the nonworking spouse in a lot of cases, we see that people choose the House. They give up all the investments and then they end up driving themselves more in debt first or the other way around. And that’s what we want to help you avoid. The next step is you have to create a whole new financial plan. Now a lot of people get a financial plan and when they have a financial plan, it’s you know maybe a 30 minute process. They set up plan for the next 30 years, right? And it’s got maybe a few assumptions like you have a rate of return you save this month. You put this much in retirement. Well, it all has changed now. And you need to revisit that plan. And once again that plan is going to change even after this, right? You may find another spouse. You may find somebody else who’s a partner for you. You may go- you know, if your nonworking spouse, you may go back to work. You may strike a deal where the spouse is now paying you alimony or some type of income, but tax laws have changed right? And-and using example of alimony, you know there was a recent tax law change where the payee used to have a tax write off and the person receiving used to have to file that as income. Well now let’s change the pay. You no longer this right off and the receiver no longer has to file income for it, which is a benefit to the receiver, not so much for the payee in that regard, but those things impact your financial plan and why, once again, you have to treat it like a business and you have to help live your plan. So, not only do we encourage you to go through a planning process, even if you do it yourself, but you can’t just do it, put it on the shelf and visit 30 years later and say, man, I hope this works. You have to look at it month to month or at least once a year, and that’s where we challenge everybody is at least look at it the end of the year going into December.
How did you do? Did the plan work? Is it underperforming? Is outperforming and maybe you can change some of the goals you have in life, but you need to revisit it at least once a year and make sure that you’re living the plan to your desires and what you want and if things change like tax laws, maybe real estate laws have changed based on the bourses. Community property laws may have changed whatever it may be. You have to make sure you live your plan going forward from this point on. And put everything else behind you, and that’s the important thing of saying, hey, it’s going through divorce, it sucks, but at the end of the day you’re living a new life. And everything about you. You need to replan and revisit. Here are some examples of marital assets that we see with your house, cars, boats, retirement plans, cash value, life insurance policy, stocks, bonds, mutual funds, stock options, bank accounts. One of the things that is important is when you look at all of these assets you have, is now you also need to make sure your beneficiaries are updated. You know, if you were emotional and you do not want your ex-spouse getting the assets, this is your time to change it and put your kids first. Or you know if you don’t have kids you know, put somebody else who you think deserves the assets that you were leaving with, but this is where you need to make sure you revisit your whole estate plan. So, the estate planning for an IRA you can just do beneficiaries. You can change those, but you may need to do redo will, redo a trust document which you do need to update your estate plan on these different items. In addition, you also need to look at when you are visiting a divorce is which assets as we talked about are important to you and important to your spouse. We use artwork as an example. So, in Austin there’s a lot of people who collect artwork, who collect wine, for example, and usually it’s one spouse who has this love more than the other. And it is a good way to sit there and have that that balance sheet that maybe you went through this spouse and they say you know what this piece of art is worth this much because I know it. I’m a collector. I believe it. And you may say great, you keep that piece of artwork for that much and I’ll take the equivalent in your IRA account and now you, once again, have the liquidity. Or they have a what we call a real asset, which a lot of times if you have to fire sells something like art or wine, you fire sell that at a pretty good discount and we talk about 20-25%, which if you don’t have the liquidity can put you in a real bind if you need it. Other things that we see people put value on and it may sound odd or things like frequent miles either for hotels, for airlines, you know there’s a couple jokes about those and movies to go through divorces, but there are things like that where you can look at that as a valuation, especially accumulated vacation payouts.
Different things like that that you may not consider or put in there as something that’s valuable, but it may be more valuable to the other spouse than you. And once again you can use something like that that seems. Like it wouldn’t matter, but if your spouse travels and that’s something that they value themselves on, it’s a good way to put some valuation on that. So once again, you can try to get more liquidity on your side. Or maybe you’re the person who wants it and says, hey, that’s what I’d like. I’d like to, you know, I worked hard to get those miles. I want to enjoy the free trips and you know, you put a valuation on it and you want to keep it. You’re willing to give up some of the retirement plan that maybe you won’t touch for 10-20 years because of the age gap. But those are things that are important to you and things that always consider there can be other assets that aren’t listed here. But this is a good kind of framework to really say hey, anything that you guys value is important. Put it down. You know one we didn’t list as pets. Typically pets go one way or the other. There is some type of value there, whether it’s emotional, or you know, some type of valuation you can agree upon as far as that being worth something. But that is another thing that we don’t have listed here that we see a lot come up in divorce, specially if they raise the pet together.
So, please, remember write every single thing down that you can, because if you can do that, the best thing you can do is work with your spouse. There-there will not be a better way through divorce than being able to come to the table, agreeing terms make it easy and make it quick because the longer you go, the more detrimental it will be to your remaining aspect, continue to budget, Estate planning, we talked about. One thing that’s important, and we see this a lot for people who go through divorce is it is not uncommon to remarry or find another partner and maybe also potentially go through another voice, but you have to look at now making sure that anything you gain and assets is yours and yours alone. Even if you re-enter into another relationship. So, in Texas, I ask this question all the time, which is you know how long can somebody tell me before your common law married? And most common target is like 7 years, 5 years. Well, actually in Texas there is no definition of time for common law marriage. It can just be simply that you cohabitated which can be defined in any link of time, really, for cohabitation into that, you put yourself out as married and what I mean by that is you could sit there and go to a hotel or go to a wedding in somebody may put you down, you know you and your guests as Mr. & Mrs. Yelich. In that example, well that person, who is on the other side, if, let’s say you ended up in a bad breakup, for example, or something else. If you have not protected your assets, they can go like in the state of Texas.
For example, come after you from common law marriage. And unfortunately, there’s nothing as common law divorce. So, this is another important aspect where, especially if you have children, you want to make sure that if you were going to have any type of relationship going forward, that anything you get out of the divorce, you revisit your estate planning and you make sure that your assets are protected just for you in just for your kids and you’re not giving it up accidentally to a Co-spouse. Now there are different states to where, Louisiana and Texas are very good examples of this where real estate becomes even more intriguing and I use the example ’cause it’s a new law in Texas where you may have once, again the second person may be the love of your life and you guys go in and you buy a home 50/50 and whether you’re married or common law married doesn’t matter in this regard. Well, if something happens to you and you have not done your estate planning or done any estate planning in this regard. What happens, let’s say that second spouse ends up passing away. Well, 50% of the home actually will default, go to their kids just like your 50% would. It would actually go to your kids, not to your actual spouse. And what happens is sometimes those relationships are really good with the second marriages kids, and sometimes it’s not. But you need to make sure you plan for that in case because we see a lot of situations where people have gone through divorce. Have you the remarried or joined into another relationship and real estate becomes very-very tricky, especially when you’re living in it and you don’t want your kids or the other spouses kids to force the house to be sold when you know the person or you plan on living on it in it for the rest of your life. So, there are unique things like that, once again, we encourage you to not feel like you have to do this on your own, but obviously go get help in this regard. But this is important thing where now with the divorce, estate planning becomes more complicated. It does not become easier in, so, revisiting that making sure you kind of plan out different parts of your life. Whether you plan to re-enter marriage or re-enter a relationship as your kids grow or you plan to have kids, maybe from a you know having a first kid from a different marriage in a second kid from another marriage, those things complicated, and, so, you gotta make sure you’re protecting your interests as well as what you want the assets to do after you pass. Investments — we really want to visit the balance sheet on the investment piece to say OK where we at with the investments. What am I getting from the investments in?
Once again, am I the one who manage these investments before? Because if not, now I need to learn because nobody is going to be doing it for me. Yes, you can go hire an advisor, but you still want to make sure you know that that advisor, good advisor, they are a fiduciary. They’ll do, you know, they’re really obligated to what’s in my best interest, and they’re actually good person will do with some best interest, right? You want to make sure that, you know, what to look for. You’re finding the right person, and this is where a lot of people struggle because now a lot of spouses don’t manage investments. Or maybe the advisor had a better relationship with one of these spouses than the other spouse. And if you’re not the one who had that relationship with the advisor and you don’t know how they were selected, you may not want to keep your investments there with that same advisor. If your husband or wife is continuing to work with them, you may, you know, get nervous or one complete separation. So, what we do is we encourage people to look and I’m actually going to skip it real quick. This is a very good neutral book, you know. Obviously, I think there’s several good books out there, including the one that I wrote, but this is a great introduction to looking for an advisor. It’s 90 pages. You can read it very easily in a weekend. It talks about a fiduciary, talks about simple ways to invest, not get complicated, not-not get into a bad product. This is something I highly encourage people to look at. It’s called The Investment Answer. It’s written by Daniel Goldie. It’s a great book. I actually give this book to new employees or new advisors.
You know that we bring out a financial planning programs and colleges or who were promoting within. And every time I give somebody this book and they finish reading it, they always come in much more knowledgeable and much more comfortable intersection or in our field. And I encourage clients to read this all the time because there’s not a better introduction book and you-there’s plenty of books you can get after, you know, once you’ve kind of read this book that could help increase your knowledge base about what to look for, or you know if you want to invest in yourself or higher an advisor, what’s important and you really need to map that out for yourself too, so… One thing that we get a lot of questions on — in a lot of our assets aren’t just in a retirement plan but are in like a 401, 457, maybe a 403B for spouses a teacher or works at a hospital, some type of non-profit, is there are things called QDROs and this is the process for splitting up a qualified retirement plan. Not like an IRA but an actual employer work plan. And we see these range anywhere from $150 to more than $1000 to process. And this is something that I think a lot of people forgets: 1) How expensive it can be and 2) What the process is and it-it does take quite some time you got approved the divorce decree is there, you know. A judge has ruled or a court has ruled how much you will receive from this plan. But this is something that is very important to know what this process is and what it’s called. Because we see a lot of people struggle with this. And there have been times we’ve seen divorces that it took, you know, a spouse or an ex-spouse four or five years to get their funds because they didn’t know what to do, they put it off, and once again, if you’re putting it off – they may not know that that person is gone through divorce, and that person could be, you know, investing the money very risky could be doing stuff with the money, for example that maybe you don’t agree upon. There’s something you need to know that you need to plan out for and you need to be able to either have the spouse notified or you be able to notify the company to make sure that they you know, position the money you’re supposed to receive the side. So, that way it’s set aside for you, you’re not waiting too long to make sure that you know 1 / 2 / 4 / 5 years down the road, whatever is left is what you’re getting, right, ao, that this is something that’s important. You know, if you have questions on it, there’s plenty of articles you can Google about it, but I just want to make sure people knew exactly what QDRO was because a lot of times the-outside the home, this is your second largest asset and it’s very important to make sure you know how these work.
So, a lot of times when we look to maintain the standard of living coming out of a divorce, we need about 30% increase in income and this is because: two things have happened, right? The overall income is potentially going down. And your expenses are going up, because now you’re not sharing a lot of your expenses with your spouse. So, for example, if there was one income coming in, so really expensive now doubled, or if there was two people and you’re alternating, take care of the kids when you’re both together and now, maybe, something is happened going through divorce and now you gotta pay for childcare or additional support. Several different things can cause the expenses to go up, but you have to know that a lot of times we see people having to go back to work if they are not fortunate enough to have done this later in life where assets are a lot higher, but you will need to find a way to make sure the income is increasing or you’re managing expenses appropriately. So, a question we get a lot is: well, statistically or-what do you see that effects women maybe differently than man or-how do you see kind of see the different roles there? And I hate putting a gender by it, but a lot of times what happens is, you know, the mother typically gets the children more often than the husband is just statistically what happens. And there’s still more husbands making, you know 80% of the income or more for a household. Then not now. We’re seeing that obviously changed and evolved, but those are questions we get a lot. So, typically I like to view this as more of who’s-who’s the main working spouse remain income receiver. But there are some things that are important, which is, you know, you need to know, if your non-working person or working person, is how much money do you contribute to the family income before the divorce and what is your ability and willingness of the former husband to make child support or alimony payments. Because, you know, if you are the person who makes the majority of the money and you end up with the children, you may not be getting as much as you think. And that is something that’s important to know and a lot of times we see this kind of negatively-negatively affect women more than it would actually benefit them in this regard if that’s what happens. In addition, we see one in five women fall into poverty, one in four women lose their health insurance for a period because they are not working. You know, if you’re able to go on Cobra, typically it’s only 18 months that you’re on that before you got to find some other type of program. If the ex-spouse can’t keep it on you and the kids on their health insurance, we see one in three women children that owned a home, lose their homes once again, and this is initially we’re not talking about over a couple years. Now we also see three and four divorced mothers, child support orders don’t receive their full payments now, there’s a lot of different statistics behind this, I don’t want to touch too much on this one, but it is something that is important to consider. Two is: even when we balance out that budget and we sit there and say, hey, this is what we expect an income versus our expenses. This is why I encourage people to make sure that you are monitoring month to month to make sure that you are actually receiving what you’re receiving.
Your expenses are actually expensive because a lot of times there may be fluctuation, especially in a time like we’re going through now where we’ve had the highest unemployment we’ve had a lot of people were furloughed or have taken a cut in their income and what you expected coming into this year may not be what you’re getting now. And so you need to make sure that you understand that this can fluctuate and why you have to be able to visit it month to month. And then we also see that there’s a lot of public assistance programs to help supplement financial needs. And a lot of times people need to take advantage of it. And if you are a single mom, there are different benefits out there that you may qualify for it. You may not know that you qualify for to help supplement income, or you know, like food stamps or some type of welfare assistance that may actually-you may qualify for it. You wouldn’t have thought as well as income tax credits as well, or having a lower income now. How does it compare for men? So, we typically attend a 40% drop in their standard of living. We usually see the ones who make up less than 80% of families income before divorce suffered the most. There is some data showing that men who make up more than 80% may improve their financial situation, especially if there’s no kids involved. That’s kind of an important point on that statistics. Now, that’s why I have under there that fathers have additional expenses, so that’s not necessarily true actually, and we tend to see the opposite when there’s kids involved. But this comes to the point of why you need to make sure you know your balance sheet and why you need to make sure you know what the income is.
Because if you are the woman in this relationship and the man makes it more than 80%. You know there’s a big gap to fill that you’re going to have to fill in the increase in income and from the gentleman side, you know, once again you have kids or other aspects to it, and you’re not making you know 80% of the money. Then you also have to plan ahead because you are pretty big risk of suffering, you know, negatively from a divorce. And then we typically see the earnings you know, kind of garnished by the state, ’cause once again, most of the time, men do not end up with the children do not end up with the family, so, as far as being governed by state, so, there are important things here. We get questions on this all the time. There are obviously other things that kind of differentiate between the two, but if you have anything else that you have questions on, you know, once again, we’re here to help and provide a new box we can.
Jessica: Perfect thank you, Dennis. Go ahead everyone and if you have additional questions for Dennis, we’ll spend a few minutes addressing them while you’re typing it in the Q&A box of the Zoom-zoom features here. I have a question for you, what is-what is something that you’ve seen people commonly do as they’re going through sorting out their finances during the divorce?
Dennis: Yep, so typically what we see is once and again when people go through finances a lot or go through like the balance sheet, we see a lot of emotional attachment usually to one or two of the assets. From-from typically one side and once again it may not be the most logical asset attached that you should be going after in a divorce or trying to negotiate, but we typically see very strong emotional attachment to a house, maybe to in antique to an heirloom, which obviously is important as it’s passed down, but it may not be the thing that you should be valuing as high as it is, so, we tend to see people think with the finances emotionally, not take a step back and try to once again think logically about this split in that regard. But the other thing that we see is a lot of times when people are going it actually visiting their finances or leaving things out. You know, we-we showed that list of things that once again, you probably don’t think about having some type of value and we tend to see that people leave those out and don’t bring us to the table when it could really benefit them. Putting a value on something, once again, like a pet like-like frequent flyer miles, hotel miles, maybe credit card miles, things like that. That really could benefit you if it’s something you’re not really passionate about keeping. So, that would be the other thing.
Jessica: Yeah, I was. I was surprised to see frequent flyer miles an-and yeah to see that on there it was definitely something I didn’t think about. Alright, does anyone else have any questions for Dennis? Give me a second here. Well, Dennis, do you have any last thoughts before we end this session today?
Dennis: Yeah, well, I would encourage people if there’s something, once again, you know you’re helping people through — actually looks like we have a question here: Have you ever thought to bringing a law officer on your team, make things less stressful on divorce. You know, there, so, that’s actually more common than one thinks. A lot of times people do need some type of lending or some type of liquidity. Once again to get through these different situations so you know it’s pretty common actually. See especially in taxes, where people put a lot of their net worth in a home or in a business to actually need some type of lending solution. They helped him go through this process.
Jessica: And I think we do have some additional questions here.
Dennis: So, looks like there… So, the next question was there was a–if there was a prenuptial in place with the home being one of the spouses name. The other spouse paid real estate taxes not expensive property, are they reversible? So, it depends. But what I would tell you is if you are not on the deed but you were contributing. You know what we consider building a cost basis in a property. You need to save the receipts. So, anything you do, even if you’re a homeowner yourself, right? You should always be saving, specially if it’s a rental property or something. You should always be saving receipts to show that once again it’s a potentially a Co-owned property, especially Community property state that maybe you’re not on the deed, but you actually have some claim to it, so, you actually if you just go after real estate taxes and other expenses on the property as reversible, you may actually not see that you may have a claim to the asset even if there is a prenup on it. Because once again, if you’re coexisting in it and you’re contributing to it, some states have unique rules on that, but it really depends on the agreement in it. But a lot of times we see if it is reimbursable, the spouse comes out with the receipts, they know exactly what they contributed to, and once again they put a value on that, and so if you have put in 20,000 to the House. We have seen people be able to go out and claim that as hey, this is a $20,000 value that I should receive as part of, you know, negotiating the split.
Jessica: Great questions. Anything else from anyone else? OK well any-any final thoughts from you Dennis?
Dennis: Yep, I was going to say before, once again, the best thing you can do during this, whether you’re somebody is helping people going through divorce or experiencing yourself, is, you know, please educate them on the importance of taking the emotion out of it between logical side on it and once again use the T charts. Make the T chart your friend and know what’s important to you from an asset standpoint, not just now, but going forward in the future. And that’s where once again we encourage you to make sure if you need outside help, get the outside help to make sure they make the best decision, not just for you now, but also for you in the future.
Jessica: Perfect thank you. Thank you Dennis for addressing a very sensitive topic for our listeners and thank you to our listeners for joining us if you’d like to contact Dennis if he wants to go to the next slide here. He will share his contact information, so, feel free to contact him. It looks like we do have one other question that popped up, did you want to address that, Dennis before we wrap up?
Dennis: So, this-yes. So, the question is-is: I parent passed away awhile ago and split the money between my spouse and myself and Roth IRA accounts? [can’t understand what he says here] but if it comes up, is that an option? So, that’s unique in the sense that we don’t typically see that happen. You know, as far as an inheritance, usually the inheritance comes in, just you know your name as a child. Usually we see this discussion between children not there, like co-own business or cones or real estate together and are going through like a business split. This one is a unique one that we would have to visit one off to understand why the Roth IRA was split to determine as far as if it comes up, is that an option. Different states are going to view any inheritance a little bit differently, so it’s really depend on the state as well as the situation that caused it, but that is a good one that once again I would seek advice on potentially from a legal expert on that one.
Jessica: Perfect thank you. I’ll thank you again, Dennis. You are definitely very knowledgeable on this topic and you know, I hope your listeners take advantage of wa- re-watching this recording when we send it out for helpful information as well as possibly reaching out to you, your contact information is on the screen here. For our listeners, let us know if this content is very helpful to you and if you have any suggestions on other financial or investment topics that you’d like us to cover, please let us know. In the short survey at the end of today’s session. We’ll go out and find subject matter experts like Dennis who can speak on these topics that you’re interested because at Upside Avenue, we’re committed to helping you live your Upside. Watch your email for next month’s webinar and follow us on Facebook, Twitter, LinkedIn, and now Instagram for the latest industry news and insights discover your Upside with Upside Avenue through our public, non-traded REIT. You can enjoy the benefits of real estate investing for as little as $2000 and you can visitupsideavenue.com or send us an email or call us if you have any questions. Thank you again, thank Dennis. Thank you again for joining us. Thank you listeners and stay safe. Sorry, sa-Stay Safe. We will see you next time.
Dennis: Thank you all. I appreciate it.
Jessica: Thank you everyone. Bye now.
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