.png)
Divorce Rich with Jacki Roessler, CDFA
Welcome to the Divorce Rich Podcast! Join your host, highly sought-after speaker and experienced Certified Divorce Financial Analyst, Jacki Roessler, CDFA in this engaging and down to earth show. Along with her guests, Jacki offers clear and detailed advice to improve your financial decisions before, during and after divorce so you can survive divorce rich! New episodes are posted every Thursday! You can reach Jacki through her Michigan-based firm, Roessler Divorce Consulting, located at 600 S. Adams, Suite 300, Birmingham, MI 48009 or by email at jacqueline@roesslerdivorce.com.
Divorce Rich with Jacki Roessler, CDFA
Why Your Lawyer is not Your Financial Planner
Ever had a doctor prescribe surgery but wondered who would guide you through the daily rehabilitation afterward? That's exactly the situation many people face in divorce when they rely solely on their attorney without bringing in a financial expert.
The most successful divorces involve a collaborative team: your attorney handling legal strategy, a financial expert analyzing long-term sustainability, and you—the informed client—making decisions based on both legal rights and financial realities. This approach not only leads to better outcomes but often saves money by having the right professional handle the right tasks.
Listen as I break down the three most common financial mistakes in divorce, share real client stories of settlements gone wrong, and explain the red flags that signal you need financial expertise on your team. You'll learn why the house you're fighting for might become a financial prison, how retirement accounts aren't created equal, and why spousal support calculations require more than just legal formulas.
Don't let your divorce victory turn into a financial defeat. Subscribe to Divorce Rich Podcast for insights that help you build both legal protection and financial security for your future.
To find a local CDFA, click the link below
Visit us at https://www.roesslerdivorce.com/ to learn more about Jacki's practice and to find valuable resources for your case.
The Divorce Rich podcast is proudly sponsored by Center for Financial Planning: Striving to Improve Lives through Financial Planning Done Right! https://www.centerfinplan.com/
Welcome to the Divorce Rich Podcast. I'm your host, jackie Ressler. I've been a certified divorce financial analyst for 28 years, helping clients and their attorneys navigate the often complex and confusing financial issues in divorce. If you're in the process of, or considering, divorce, now is the time for you to take a deep breath and give yourself permission to find clarity on the financial issues you're facing. Rich means many things to many people. I believe the best definition of being rich is someone who has access to many resources. Along with my guests on this podcast, I will be bringing you a wide variety of information so that you can make sound and informed financial decisions for your financial future.
Speaker 2:Hey, if you're recently divorced or still in the middle of it, you already know that life can feel like it's been turned upside down and, let's be honest, the financial part it's overwhelming, confusing and often the last thing you want to deal with. That's why I want to tell you about the Independent Wealth Management Team at Center for Financial Planning. Their team of certified you want to deal with. That's why I want to tell you about the independent wealth management team at Center for Financial Planning. Their team of certified financial planners specializes in helping people just like you navigate life changes with confidence. Whether it's assessing your new financial circumstances, creating or updating your retirement plan or helping you adjust to the new normal, they'll work with you to get a clear, customized plan to feel in control and move forward with confidence. So if you're interested in working with a financial planner who you can trust to have your best interests in mind and you're ready to take the next step, visit centerfinplancom that's centerfinplancom and schedule a conversation. Center for Financial Planning live your plan.
Speaker 1:Disclosure Securities offered through Raymond James Financial Services Inc. Member FINRA, sipc. Investment advisory services offered through Center for Financial Planning Inc. Center for Financial Planning Inc. Is not a registered broker-dealer and is independent of Raymond James Financial Services. Center for Financial Planning was a sponsor of the Divorce Rich Podcast. The Center for Financial Planning and Raymond James are not affiliated with or endorsed by the Divorce Rich Podcast.
Speaker 2:Hi everyone and welcome back to the Divorce Rich Podcast. Today I want to talk about one of the biggest misconceptions I see in divorce. People expect their lawyer to be their financial planner, and that's a really expensive mistake. Your lawyer's job is to get you the best legal outcome. As a financial advisor working in divorce, my job is to make sure that outcome actually works for your life. If you confuse the two, you risk winning your divorce on paper but losing it in real life. I had a client once who came to me post-divorce with a lot of assets that didn't really make sense for her financially. She wanted the house and she was stuck that that was the only thing she wanted and she was willing to give up a lot of other pieces in the financial settlement in order to get that house. So she did get the house. She won it legally but she couldn't afford it and two years later she ended up losing the house. And once the settlement is done you never have the opportunity to go back and redo it or fix it.
Speaker 2:So I'm going to talk today about why lawyers are not financial planners and why it's best to have a team that includes a lawyer, a financial planner and you, the informed client. So let's dig right in. Here's the thing Lawyers are amazing at what they do, but they're not trained to be financial advisors. Lawyers in a divorce are trained to navigate the legal system. They know family law inside and out. They know how to draft orders, settlement agreements and court motions. They negotiate on your behalf and make sure that your rights are protected during a divorce. They're your guide through the legal maze of divorce. But they aren't trained to handle the numbers side in a detailed way. They don't calculate the growth of retirement accounts over time, for example, or analyze complex stock options or provide strategic advice on taxes or retirement planning. That's not a knock on lawyers, it's just not part of their training. That's where a CDFA or a Certified Divorce Financial Analyst comes in. A CDFA takes a deep dive into the numbers, the investments, the retirement accounts, even the tax implications of your settlement. They can show you what your life could look like financially after divorce, which will help you make informed choices, not just legal ones. Think of it this way your lawyer is your legal guide. They know which doors to open, which ones to avoid and how to protect you in court or negotiating your case in mediation, or even just one-on-one with the opposing attorney. Your financial professional, however, is your navigator for the road ahead. They help you map out your long-term financial journey for the road ahead. They help you map out your long-term financial journey. When lawyers and financial professionals work together, you get the best of both worlds You're protected legally and your financial future is planned thoughtfully. That collaboration is what makes the difference between just getting through divorce and actually coming out on the other side financially secure divorce and actually coming out on the other side financially secure. So let me give you some examples of when the line gets blurred between treating your lawyer for their role and expecting them also to do financial planning for you.
Speaker 2:The classic example is the one that got me into this business in the first place. 30 years ago, I had a fantastic family law attorney. Refer a client to me for financial planning after the divorce was done and this attorney said to me I got her the best settlement that I could. I got her the house. That's what she asked me for. So post-divorce I sat down with this client I was a very young financial advisor and we went through her budget and we went through some financial projections and I looked at the outcome of the projections and it was pretty clear that she was not going to be able to afford to keep that house without some major financial adjustments, which might have included her going back to work full-time or reducing her lifestyle significantly. In any case, she was not able to do that and she ended up having to sell the house at a time when the market was down. And this whole experience was really disheartening for me and was the reason that I got into this business of being a divorce financial planner.
Speaker 2:I went back to this attorney and I said, hey, would you be willing to send me clients before the divorce is final so I can help them work through whether or not they can afford to keep the house? And he said, sure. So I started to get clients from this attorney and he would send me people that were in the same situation. They wanted the house, they were willing to give up everything for the house, willing to give up part of a pension, retirement accounts, alimony. So I started going through and doing what I normally do with clients, which is we start with the budget, we start with your cash flow and we take a look at whether or not you can afford to keep the house today, and also running financial projections to show the client what they might look like financially in five years, 10 years, 20 years if they keep back that house. I have several cases open right now where that's what I'm working on with clients is not just working to make sure that they can get the house, but having them understand whether or not they can afford to keep it.
Speaker 2:Another example of this line getting blurred is when attorneys will recommend that a client split up all of the retirement accounts equally and just walk away from that scenario without telling the clients the implications of splitting every account equally. So, for example, there are some retirement accounts like annuities that would be better for the client potentially not to take that asset but instead to take the kind of retirement asset that they can roll over into an IRA and also maybe, if they have cash flow needs, they can tap into a qualified plan instead, like a 401k or a 403b, because there's a one-time exception where you can take money from one of those accounts through a qualified domestic relations order pursuant to your divorce, or a quadro for short, and you avoid the 10% penalty that you would normally pay if that money came to you from an IRA account or a non-qualified annuity where there would be penalties and even maybe surrender fees that would apply. That's a pretty common mistake that I see when clients are asking their attorney or accounting on their attorney to give them financial advice when that's not really their job. Their job is to get that portion of the marital estate for the client. They're not really trained in how to read through annuity contracts and figure out which is the best policy or which is the best retirement account for you to receive. That is another important example of when you really want to have that case involve a collaborative team with a lawyer, client and a financial advisor. Let me give you the third and the absolutely most common example that I see of a client treating their lawyer like a financial advisor.
Speaker 2:In Michigan we do not have spousal support guidelines. Many states do not have spousal support guidelines. If you live in a state that has a guideline, consider yourself lucky or unlucky depending on what side of the table you're on. But when you have a guideline, that's a formula and it's easy to plug factors into a formula Length of the marriage, it could be age of the parties. Other factors could be income of the parties, living expenses of the parties. Those are all factors that could go into a formula if your state has one. Mine doesn't have one. However, there are several tools that lawyers can use as a starting point so they know what the basement and the ceiling might be for spousal support purposes in whatever case they're on.
Speaker 2:I'm not going to mention this software by name, but I will say that I don't love it. It is a great starting point. I do run it in every case that I'm working on so that I can see what it says. The problem with this software program, which is not the law in Michigan but simply a tool designed by a private individual, is that I can't break through the black box. I can't see what the formula is in this software program.
Speaker 2:So it asks me for six of the 13 factors that could be taken into consideration. It asks me for the age of the claimant or the person who is the lower wage earner. It asks for the length of marriage. It asks for each party's income. It asks for how many minor children there are. Who is the primary caregiver and how you would rate their income earning potential on a scale, a numeric scale expenses of either party. It does not ask you for the age of the payer. It doesn't ask you for qualitative things, things that you can't actually put a number or a quantitative number on, things like past lifestyle of the parties, things that are factors in a divorce. Does the person have any separate property that could be a factor? Fault could even be a factor in spousal support. So there really isn't any way to quantify these things. And again, it is one person's opinion of what this person who created this software thinks is fair.
Speaker 2:So when clients are relying on attorneys to help them get the best settlement in terms of spousal support in Michigan and the only tool that's being used is looking at this software program that was created by an independent individual, that's where that line gets blurred between what a lawyer is qualified to do and what a financial planner could help with that client on that particular case and situation. So, as a CDFA, what would I do? That's different. What I would do is I'm going to run that software program. I'm going to use every tool available to me to have a conversation with the attorney and the client. Next, I'm going to take a look at an actual tax planning divorce software program that I use that will analyze the combined percentage of the total after-tax income of both parties and if it looks like the lower wage earner is getting 20% of the combined after-tax income and it's a 15-year marriage, that looks to me like something that everybody should take a look at and address. We also look at cash flow and what the needs are of not only the person who is asking for support but also what the financial needs or living expenses of the person who is being requested to pay support. It's difficult to know what that person can afford if we don't know what their living expenses are. All of those things, taken in combination, frame a conversation that can be had between the lawyer, the client and the financial planner about strategizing for spousal support.
Speaker 2:Let me give you a real-life analogy to help bring this concept of the symbiotic relationship between the lawyer, financial planner and you during divorce to life. Let's say that you have an injury. You go to see a doctor and let's say you tear your ACL. The doctor is going to give you a prescription of what you need to do. It could be that the doctor prescribes surgery. The doctor will give you a diagnosis. It could be that the doctor prescribes medication, staying off your feet, going to physical therapy, all of those things that a doctor's role involves. Well, that's your lawyer's role in divorce. They know the rules, the procedures and they're going to give you the legal prescription to protect your rights. But here's the thing After surgery, the doctor doesn't stay with you every day to make sure you're doing the rehab, building your strength back and actually heal it.
Speaker 2:That's where the physical therapist comes in. Now, if you've ever had physical therapy I have had physical therapy. I had back surgery last year and I loved the physical therapist. They were there with me in the trenches helping me get through the daily tasks that I needed to get through to get to the other side of that pain and to actually heal my body. The physical therapist helps you with daily exercises, monitors your progress and gives you the tools to actually get back on your feet. That's what I do as a CDFA. I'm the one running the numbers, stress testing your financial plan, making sure that what looks good on paper legally will actually work in your day-to-day life.
Speaker 2:And, of course, in this analogy, you're the patient. You're the one who ultimately has to do the work and make the choices. The doctor can prescribe the treatment and the physical therapist can guide you through the exercises, but you're the one who has to live with the results. And this is what I tell clients day in and day out. I can't make the decision for you on whether or not you should keep the house and sacrifice some of your retirement. I can't make that decision. But what I can do is I can illustrate for you the pros and cons of going with whatever choice. We can come up with whatever's on the table and whatever we can create as an option that might not even be on the table, but you are the one that has to live with it. At the end of the day, you need to be the one making the choice. Now imagine if you only had the doctor. You'd walk away with a prescription but no plan for recovery. And if you only have the physical therapist, you might have exercises but no clear diagnosis. When the doctor, the physical therapist and the patient work together, that's when you get real healing.
Speaker 2:Divorce works the exact same way your lawyer, your financial expert and you all working together. That's when you get a settlement that's not only legally sound and enforceable but also financially sustainable for long term, and something that you took apart in crafting. So are there any red flags that say, when you're using your lawyer as a financial planner? I'm going to give you three. The first one is you're ask your attorney, can I afford this? Instead of what is legally possible. So that is a really that's a key red flag. When you find yourself calling up your attorney and asking your attorney if you can afford something, what do you think is the best thing for me to do? Should I keep the house? Should I divide up my pension? Is that a smart thing for me to do?
Speaker 2:Whenever you're asking your attorney if you can afford something, you are looking at your attorney through the wrong lens. That's not your attorney's job. Their job is to tell you what legally is possible, what you could legally get if your case went to court, what you might get in mediation. But what they're not able to tell you is whether or not you can afford something. And if that's what you find yourself asking your attorney, that's a red flag to you that you probably need a financial advisor on your team. Another red flag is your attorney has never looked at or asked for a budget, your kids' expenses or retirement account statements. That's another red flag and again I don't want to.
Speaker 2:This is none of this is a knock on attorneys. Attorneys have a very complicated job in divorce. A family law attorney has to know all of the laws that relate to parenting, custody, spousal support, child support, property division and all of the legal court rules how to negotiate. I mean, those are all really complex parts of their job. Their job is not to take a look at your expenses and tell you that you forgot to add in the cost for COBRA or that you know you're probably going to have to add something in for house maintenance because your spouse used to do the maintenance and now that's going to be you. So if your attorney never asks you to look at your budget, in some states it's required on your financial disclosure form that you have to turn in what your budget is. Again, in my state of Michigan it's not required, and so people do not turn over their living expenses or their budget. I was just meeting with a client the other day and we talked through that child support does not actually cover your children's expenses and if you have kids that are driving cars or have car insurance and cell phones these are all things that are on my mind, of course, because I do have children in this situation then you know that those things could be really expensive. Child support is not meant to cover those things and if you want some of those things covered, you need to negotiate for that during your divorce case. And that might not be top of mind for your attorney, because they're trying to figure out what the parenting schedule is. Again, that financial advisor's job is to talk with you about affordability and help you flesh out what you need financially to make the settlement work today and in the future.
Speaker 2:Last red flag is that your settlement strategy is based on fairness rather than real numbers. So what does that mean? Rather than real numbers? So what does that mean? So your settlement strategy is based on I just want to get 50% of the assets, I just want to get what's fair. When you use that language with your attorney and your attorney, certainly you want your settlement to be fair. That is a given, but your strategy needs to be based on real numbers. So what is the other person's income? How do we analyze their payroll stub and make sure that Payroll stubs are pretty confusing. Every company's payroll stub is printed out differently and there are different items on there. If there's any executive stock or deferred compensation, that makes it also difficult Sometimes it's even difficult to know what is the difference between the person's base income and their bonus income.
Speaker 2:Those are all things that you want to bring a financial advisor into the end of the team to help figure out and determine what is a reasonable settlement based on the facts of the numbers. So you want to look at all of the statements. What is the best asset for you to get in the case? Fair is 50-50, yes, but is it also important that you get all of the stock that is not highly appreciated, that you're going to have a big tax liability when you take that part of your settlement? All assets are not created equal and they're not all right for your particular situation. So again, this is where you really want to involve a financial planner to help make sure that your strategy for your divorce is based on what your personal financial situation is, your needs, your values, your goals and the actual numbers. So how do you protect yourself? How would you have that conversation with your lawyer if there isn't a financial advisor on your team and you feel like you really need there to be one. You can certainly ask directly who's going to be helping me with the numbers. The answer that you're looking for is someone the attorney, hopefully, is going to ask you do you have an existing financial planner that can help you? If you don't, maybe we should bring a CDFA ad board.
Speaker 2:You want to build a team that includes a lawyer plus CDFA and sometimes maybe even an accountant. If needed, there are other experts that might be brought in as well. Sometimes you need a forensic accounting expert, someone that can go back through records and determine if there's been a misappropriation of marital funds or dissipation or hidden assets. Then you might need to have a forensic accountant in. You might need a business appraiser in the case if there is a business that one party owns and that needs to be valued. That's different than a CDFA. Also, I highly recommend also that if there are retirement accounts involved, that you bring in a CDFA that has some expertise with pension plans and how they're divided, as well as the complexities of some defined contribution plans and how those are divided.
Speaker 2:If your CDFA doesn't have that area of expertise as part of what their practice is, then you would want to bring in someone who is a Quattro expert just to give you some consulting. Why does this save you money over time? So this is a big key part of this whole conversation. The reason why it saves you money to bring in a CDFA or an appropriate financial expert for your case is that you're not paying your attorney to do work outside their specialty at their hourly rate. So it would be better for you to have a quadro expert that can come in and explain to you in 30 minutes the difference between a shared benefit and a separate interest quadro and the pros and cons for you of doing it either way. Rather than having your attorney spend hours at their rate or their paralegal's rate reading through a summary plan description and a model quadro, it's more cost effective for you to go directly to the expert. Also, this saves you some stress. You'll feel more confident when the legal strategy and the financial reality aligns and you are educated about the decisions that you're going to be making. And you are educated about the decisions that you're going to be making, you'll also end up with fewer regrets down the line.
Speaker 2:As I always tell clients, the decision is up to you. I can only show you the potential financial outcome of settlement A versus B versus C. I don't have a crystal ball, but I can give you an educated guess on what the financial outcome is, based on my expertise and my experience. If you decide with that knowledge that you still want to keep the house, even though it looks like you might not be able to afford it long term, that's okay. Then at least you don't have that regret that you made an uninformed decision. Any informed decision that you make is better and is going to lead you down a path where you don't have regrets post-divorce.
Speaker 2:So let's recap your lawyer's job is to protect you legally. My job as a CDFA is to protect your financial future, and your job this is important your job is to define what really matters to you. Together, that is the winning team. Don't confuse legal victories with financial security. You deserve both. So I would invite anyone, if they feel like they've got questions and they're not sure if they need a CDFA, that they reach out to a CDFA locally in their area. You can always find someone on the Institute for Divorce Financial Analysts website, which I am going to link in the show notes. If you are local here in Michigan, you can make an appointment with me and we can talk about whether or not you might need a financial advisor and how they can help on your case. Stay tuned for the mailbag segment up next. Okay, it's time for our mailbag segment, where my son, kevin, will host and picks out some special questions from our mailbag to share with listeners. Hey, kev, welcome back to the mailbag segment. Glad to be here. What have we got today?
Speaker 3:All right, so this is from David in Traverse City, michigan. So he asks we sold the lake house in the divorce. Now I want to use half of it to buy my own dream home. Is that dumb at 60? After 35 years of marriage, I finally have a chance to make decisions for me. Everyone says I should be downsizing and playing it safe Thoughts.
Speaker 2:That's a big question and of course I don't know david, so I don't know what his financial situation is really like. But what I will say is um, it's fine to listen to what other people advise and think, and maybe it is better for him to downsize than to spend his money on a new lake house or lake a house on the water. But what I really would recommend David do is take a deep breath, take a step back and give himself at least a year to really kind of see where things settle and land with his finances. Divorce is such a big financial transition and it's really hard to know. You know how you're going to feel about things in a year. And so a decision of like buying a second house right away on the lake to me it's not about the fact that it's downsizing or not downsizing. It's more of an issue of leaning on your current emotions to make your financial decisions, and it's very easy to do that during a divorce.
Speaker 2:But what we want to try to do, as I always recommend to clients, it might even be worthwhile to rent for a year. And people will say I'm not supposed to, I shouldn't rent. You know that I'm not building up any equity. If I rent, I should go out and buy something else right away.
Speaker 2:But the truth is, in the early years of a mortgage, you're not paying down any of the principal balance on your loan. Everything is going to the interest, and many people find that where they think they're going to want to end up right after the divorce is over isn't where they want to end up in a year, and so it makes some sense to slow down and really start, you know, doing the things that need to get done when your divorce is just final. So if there are quadros that need to get done to divide up retirement accounts, get those done. Transfer bank accounts into an account in your own name, split up the other assets, do all of those kinds of bookkeeping, business type things, and maybe keep those big, big decisions about buying a house for at least a year out.
Speaker 3:Thinking in the short term for now, before stepping back to go for the big picture, kind of things.
Speaker 2:Yeah, exactly.
Speaker 3:All right, thank you, david. That's going to do it for our mailbag segment today. Make sure to keep sending those questions in. We love getting to talk about them, yeah.
Speaker 2:And, as a reminder, the email address to send them to is divorcerichpod at gmailcom. Thank you so much for taking time out of your day to listen to Divorce Rich Podcast. If you like this podcast, please follow us on Apple or anywhere that you download podcasts, and share this link with any friends or family that you think might benefit from this information.
.jpg)
