Divorce Diaries: Lessons From the Trenches
Welcome to Divorce Diaries, where host Cary Jacobson, attorney and mediator brings you real stories, hard truths, and practical advice on navigating divorce and family law. Whether you're going through it, considering it, or just curious, this is your place for clarity, confidence, and resilience.
Divorce Diaries: Lessons From the Trenches
EP #10: Navigating Divorce Finances Confidently with Guest Leah Hadley, AFC, CDFA
Divorce often presents a whirlwind of emotions and financial decisions that can leave anyone feeling overwhelmed and uncertain. In this episode, host, Cary Jacobson, attorney and mediator, sits down with financial expert Leah Hadley, who brings two decades of experience to navigate the crossroads of divorce and personal finance. Drawing on her own transformative journey, Leah shares how critical financial planning can lead to empowerment and success during such challenging times.
Join us as we discuss actionable insights and strategies for navigating your financial landscape post-divorce. Remember, financial clarity is possible even amid change! Don't forget to subscribe and share this episode with anyone who might need a little guidance through their financial journey.
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People get tired through the divorce process. It just it's a lot of change. It's just there's a lot to it, right, but one of the most common mistakes that I see is people will come and reach out to me years post-divorce and they never settled their assets from the divorce because they just kind of put it off. You know, maybe they were retirement assets and they figured retirement was a long way off. Unfortunately, sometimes the other person passes away. That becomes very complicated.
Speaker 2:Welcome to Divorce Diaries, where attorney Keri Jacobson brings you real stories, hard truths and practical advice on navigating divorce and family law. Whether you're going through it, considering it or just curious, this is your place for clarity, confidence and resilience.
Speaker 3:Welcome back to Divorce Diaries Lessons from the Trenches. I'm your host, keri Jacobson, and this podcast is all about sharing real-world divorce experiences and lessons learned to help you navigate your own journey with more confidence and less stress. Today, I'm thrilled to welcome my guest, leah Hadley. Leah will tell you that she is no stranger to financial challenges. She became an adoptive parent to three overnight, got divorced and built her business from the ground up, to name a few. These were times when careful financial planning was critical for her peace of mind. Now an award-winning financial planner, sought-after speaker, accredited financial counselor and certified divorce financial analyst, leah is the founder of Intentional Wealth Partners and Intentional Divorce Solutions, as well as the host of Intentional Wealth Partners and Intentional Divorce Solutions, as well as the host of Intentional Divorce Insights podcast. She uses her knowledge and nearly 20 years of experience to help clients make wise financial decisions so that they feel confident in their financial future. Leah, welcome to the show. I'm so excited to have you here today.
Speaker 1:Thank you so much. It's my pleasure to be here.
Speaker 3:Well, I know we haven't talked in a while, but I would love to learn and share with our listeners kind of more about your journey. You know, as I described in the bio, you've been through some significant life changes and transitions. Can you tell us how that journey has helped you kind of in your approach to financial planning in the divorce space?
Speaker 1:Absolutely so I actually started in the financial world in equity research, so I was covering individual stocks for institutional investors, and then I was ready to have a family and so I left that role, which required a significant amount of travel, and became a financial advisor supporting families, individuals, small businesses, just general financial planning and investments. And one of the things that I saw frequently I had taken over somebody's book of business was that people would go through a divorce and then they would just blow through their assets following the divorce and what it came down to was very poor planning that they had come to an agreement during the divorce process. That just wasn't in their best interest long term, and so that really bothered me. So I had a friend who was a family law attorney and I just wanted to learn more. She introduced me to how financial professionals can really help people through the divorce process.
Speaker 1:I learned about the CDFA designation and then I ended up going through my own divorce and even as a financial professional I was completely overwhelmed with the changes in the finances. You know, I had three young children at the time and I stayed in the marital home and it was a lot to be responsible for and take care of and all of that, and so, knowing that I had a lot of financial expertise and background and feeling as overwhelmed as I was, you just see how important it is to have somebody really be your guide through the process when you're going through this emotional turmoil. And one of the things I quickly learned was that in the traditional kind of broker dealer world financial services, there's so much compliance regulation that it's very hard to work with people going through a divorce within that context, and so ultimately, I started my own firm so I could really meet people where they're at and help them in a way that's meaningful.
Speaker 3:Awesome and kind of explain how you work with either couples or individuals who are going through that process and I'm sure that it varies depending on if you're working with a couple versus if you're working with an individual, as I know that our work does as well but can you kind of explain what that typically looks like?
Speaker 1:Absolutely so. I either serve as a financial neutral or as a financial advocate. Typically, when I'm working as a financial neutral, most of the time I'm being hired by both of the parties to help them understand their financial situation, to look at various scenarios that might ultimately be how they divide assets, how they determine, you know, child support, spousal support, those kinds of things and work with them to come to a resolution. When I work as a financial advocate, sometimes I'm hired by the individual and sometimes I'm hired by their attorney, depending on the nature of their case, in which case it's still very similar in that I'm helping them to understand the financial picture. You know, sometimes we're looking to figure out what's marital property versus what's not marital property. It just depends on the nature of their financial situation. Sometimes it's just financial coaching and helping you understand what is my post-divorce budget going to look like? What do I really need to support myself going forward, how can I reposition my assets to generate more income, those kinds of things.
Speaker 3:Wonderful. I'm going to kind of take each of those pieces kind of separately and tie them into. You know what we work on as well. So when you're working with a couple as a neutral, what other professionals typically are in that process? Is it just you and the parties, or are there other professionals that get involved in that process?
Speaker 1:That's a great question.
Speaker 1:A lot of times they might be working with a mediator but they might need more support around.
Speaker 1:Sometimes it's just the financial analysis itself, right, like determining what is marital property versus non-marital property, but sometimes it's really looking at those different scenarios, looking at the projections of how we divide things and that sort of thing. So sometimes it's just sort of supporting that mediation process. Sometimes people are going through the collaborative divorce process where they each have their own collaboratively trained attorney and then I can support that financial analysis to really help everybody understand the financial piece of it. You know, a lot of times people don't think about it, but when you're going through your divorce it's often the biggest financial transaction of your life and really having that financial expert help you to understand what are the tax implications of the decisions that we're making, what is the impact both short and long term on these decisions, you know, looking at it through that lens, really supporting the other professionals through this. So we don't provide legal advice or anything like that, but really help people understand the financials and then encourage them to have their attorneys support them with the legal guidance.
Speaker 3:Yeah, so very similar. I find that when we're working with couples in a mediation setting, many times they're coming to us because they don't want to have attorneys involved because of, you know, the typical stigma of how that's going to complicate things, and as an attorney I know that and so you know. But there are times where their financial structure, their assets, the support that might be involved, really gets complicated and as a legal mediator I don't always feel equipped to handle all of those aspects and often will recommend that they talk to a financial neutral to handle the financial side, kind of reach an agreement on that piece, then bring that back to the mediation table so that it can be included in their agreement and so that there's no surprises going forward.
Speaker 1:Right, yeah, absolutely. And again, it really isn't about, you know, stepping on anybody's toes or anything like that. It's really about making sure that the parties feel supported and these are important decisions that they're making and making sure that they're informed.
Speaker 3:Yeah, absolutely, and I think it's, you know, making sure they have the full team that they need, and sometimes that will include having attorneys so that they get that legal advice first before they kind of go into those negotiations and can make informed decisions. But they have that as like that legal backdrop and then using a financial neutral on a mediator to really be the process for which they actually come to an agreement. Yeah, for which they actually come to an agreement. Yeah, in your work as a CDFA primarily, I would assume, when you're working with an individual, I'm sure you have seen countless financial mistakes that people have made during divorce. What would you say are some of those biggest financial pitfalls that you see and how can people avoid them?
Speaker 1:Yeah, one of the biggest ones, and I really fully understand where it comes from. People get tired through the divorce process. It just it's a lot of change. It's just there's a lot to it, right. But one of the most common mistakes that I see is people will come and reach out to me years post-divorce and they never settled their assets from the divorce because they just kind of put it off. You know, maybe they were retirement assets and they figured retirement was a long way off. Unfortunately, sometimes the other person passes away. That becomes very complicated. Sometimes accounts get moved and we end up having to do further analysis to determine what that person is actually owed at this point. And so if you take one piece of advice, it would be to just go ahead and settle, tie up all your loose ends as soon as you can post a divorce, because that is a very, very expensive. I mean, there are people who we've seen lose tens of thousands of dollars as a result of just not getting that done.
Speaker 3:Yeah, I always recommend that. You know, best practice is to go ahead and get those retirement orders done at the time of the divorce, have them signed and have those you know sent off. You may not see the, you know, especially when we're dealing with pensions and stuff. You may not actually see that money anytime soon, but at least at least you can rest assured that it's taken care of, right. But, like you mentioned, there are scenarios where people don't do that. The spouse passes away, they have updated the beneficiary Right and now the beneficiary controls and that other person may not necessarily receive the assets that they were entitled to, and it's very unfortunate. But one of those things to absolutely do, yeah. And then the other thing that kind of ties into that, which is I'm sure you see this on the financial planning side having people update and do their estate plans.
Speaker 1:Oh for sure. Yeah, again, it's same thing. Right Is that you're tired. You've already been, maybe, dealing with an attorney through the divorce. You don't necessarily want more legal bills, but it's really about having a say in. You know how things will transition, and not even just if you were to pass away, but what if you become incapacitated? Now you don't necessarily have this default partner who's going to be taking responsibility, who's going to step in, you know, and so it really is important that people follow through on those things. Yeah.
Speaker 3:Obviously, divorce is probably one of the most financially disruptive events in a person's life, you know, without it being a loss of job or something along those lines or getting sick, but it definitely can be one of those top ones For someone who is going through the process. What was, what would be one of the first financial steps you think or would recommend that they take?
Speaker 1:Yeah, the first step is just to gather your information.
Speaker 1:Carrie, I can't tell you how many people I've seen over the years who have just weeded and weeded and weeded and not move forward with a divorce because they were really afraid to deal with the financial change, the financial aspects.
Speaker 1:They didn't necessarily know what their financial situation was, to know what it would look like if they were to divide things.
Speaker 1:And in some cases I'll tell you, I'll sit down with somebody and I'll kind of walk through the finances and I'll say you know, if you're able to stay together and save more money and pay down more debt, that might be beneficial and leave you in a better position going forward. But there are some people who you're going to be just fine and it was just that fear of even looking at the numbers that allow them you know, once they see that to move forward and to be in a healthy relationship moving forward. So it's really really important to have clarity around the numbers. Now, one of the challenges, of course, is you may or may not have access to the financial information, and that's different in every household. You know who has access and who doesn't, but you know the more that you can be communicating around the finances, talking about financial goals. You're doing retirement planning together. Taking in all that information is just going to be a really important start to helping you know what this next phase of your life is going to look like.
Speaker 3:Yeah, absolutely. I agree that in many situations. I agree that in many situations, one of the biggest hurdles is that fear of the unknown Right and simply taking the steps to find out what that's going to look like.
Speaker 1:Right.
Speaker 3:Yeah, strategies to ensure a fair division of assets, especially when one person, or one spouse has been the one to really handle the finances over the course of the marriage.
Speaker 1:Yeah, it's really important again to understand your financial situation, to even know what's going to be quote fair, right. Also important to do it within the context of the laws in your state, because what's fair in Ohio might not be fair in Maryland, right, and so really understanding that and being educated around that so that you're making good decisions. But where I see and it honestly often surprises me where I see people not getting fair settlements and not even realizing it, is that they don't understand the tax implications associated with the decisions that they're making. Right, and so if they don't understand and they're taking a particular asset and planning, you know, to liquidate that asset and creating a significant tax liability, well, suddenly the value of what they're receiving is significantly less than what they thought they had gotten. Right, and I will tell you, this happens to very well-educated people. This is not, like you know, people who don't know better.
Speaker 1:I see it all the time where you know one of the parties gets most of the Roth retirement account money which is post-tax, after-tax money, and another party gets more of that pre-tax retirement money. Well, those are not worth the same thing on paper, right? You really have to consider the tax issues. I see people who fight to keep the house, then turn around and sell it and have to pay the capital gains tax on the increase.
Speaker 1:So, really, it's so important that you really understand the whole financial picture. What changes you're going to be making and what that means for you longer term and those tax liabilities that could come up are really, really important. The other thing, though, is just to keep in mind that fair is in the eye of the beholder and, honestly, nobody really going through a divorce feels like it's fair. You know, on some level, there's some piece of it that's unfair. What I really encourage people to do is understand their financial situation and make sure they're going to be okay, make sure that they have a plan going forward. It might not be perfect, but at least they can feel confident in their next steps.
Speaker 3:Right and going into it, knowing the correct decisions to make based on what their needs are, as well as you know those tax implications exactly yeah, yeah, you know, when we're dealing with Roth versus those pre-tax things, I very much try to keep them in their own individual pots.
Speaker 3:You know, we deal with Roth IRAs separately over here and then we deal with those pre-tax dollars over there. But oftentimes the two biggest assets you know a couple has are those retirement accounts and then the values of the house a couple has are those retirement accounts and then the values of the house. And so I think what I typically find often is one person wants to stay in the house and so they're almost kind of exchanging part of the equity there for what a part of their portion of the retirement could be.
Speaker 1:The retirement could be, and so that takes into a whole different tax implication and long term planning Exactly, and that's you know. When we were talking about pitfalls earlier, that is a very common pitfall is to maintain a home that you can't afford and with interest rates having gone up, a lot of people have a fantastic interest rate on their mortgage and you really have to factor in all the considerations If you have to refinance, if you have to buy that person out of their equity in the home. It's a very different picture than it was just a few years ago when we were working on divorce cases, with the lower interest rate environment and people have to make some tough decisions. But keeping a house that you can't afford really being cash strapped, it just doesn't give you as much freedom and flexibility.
Speaker 3:Right, yeah, it's. It's really hard decision to make for sure. How would you approach conversations about the long-term financial security, including that tax planning, for folks who are, at you know, going through a divorce, but looking that long term and post divorce?
Speaker 1:Yeah, so it's so important. Especially, you know, we deal with more and more cases where people are at retirement or already retired and they're going through a divorce. So it's very different conversation about retirement when you're no longer saving right, when you're no longer saving right, when you're no longer earning income toward that retirement, and especially if you had planned jointly for one household. Now, sometimes people plan for more than one household in retirement. That does make it a little easier. But if you had planned for one household and now two households need to be supported and it's very hard, you know, at your age to go back to work, to reenter the workforce, that kind of a thing can be really, really challenging. And so I really encourage people to understand okay, if we're giving up retirement assets, what is that going to mean for me long term?
Speaker 1:Am I in a position, do I have the earnings capacity, to replace that retirement money? Am I in a position like, depending on how many years left I have the earnings capacity to replace that retirement money? Am I in a position like, depending on how many years left I have until retirement, do I have time to replenish them? You know, looking at all of those factors and also looking at who else is going to be depending on you financially. Right, you know. Are you caring for an aging parent? Do you still have an adult child that needs support? You know, depending on where people are, it's just such an important consideration. You know it's easier conversation with people who are younger, who just have time on their side, and reentering the workforce might be easier if they're not in the workforce or looking at ways to increase their earnings capacity. You know there's more flexibility there. But as people get closer and closer to retirement or are in retirement, it's a little trickier.
Speaker 3:Yes, those gray divorce situations. They're definitely different things for us to look at, both from a legal standpoint as well as that financial planning perspective. Absolutely legal standpoint as well as that financial planning perspective? Absolutely, I'm sure that you have some real life success stories, because you know we always want to offer hope to an inspiration to our listeners. Can you share a story about a client who you know transformed their financial future after working with you through a divorce process?
Speaker 1:Absolutely.
Speaker 1:I've seen so many transformations, which is just a lot of fun, quite frankly, but one of the ones I'll talk about you know this was unfortunate.
Speaker 1:It was a very high conflict divorce, and you know there was a significant age difference between the parties, so there was quite a bit of separate property that husband was walking away with, and wife, who was the primary earner at that point, was significantly younger and walking away with a whole lot less.
Speaker 1:So she was very concerned about replenishing for retirement, and so what we really talked about is how could she increase her earnings capacity? What could she do to really adjust the trajectory of her financial picture? And so what we decided was to actually take some of her divorce settlement and invest it in her education ways to invest right, but one of those ways is to invest in yourself and to look at how can I position myself for the rest of my career to be making more money so I can save more for retirement and I can still have the lifestyle that I was planning for. And so she is actually wrapping up school right now. She has a job offer that is substantially higher than where she was at prior to investing in this additional program, and I think the trajectory just looks wonderful for her. I'm really excited for her.
Speaker 3:Yeah, that's so wonderful, but I do think people overlook that option of investing in yourself and getting those additional pieces of education. Not that it has to be formal education and like a master's or a PhD right, but even just learning a new skill that will help you position yourself in a better light, that could exponentially increase your income, which is going to, you know, set you up more securely financially going forward.
Speaker 1:Yeah, I'll tell you one other quick one. This was a woman who I was working with, who she was just underpaid, and so she was really struggling post-divorce with her financial situation and trying to figure out like they still had some legal bills they were dealing with. It was, it was kind of a messy situation. And I said to her you know, because I work with a lot of people, so I see why people get paid and I said to her you know, why don't you either talk to your employer about additional compensation or look at addition, the same role at other companies? Because you're just not compensated appropriately right now.
Speaker 1:She was able to double, double her compensation within a year. I mean night and day, for her financial situation. She had a little one at home, I mean it made such a huge difference and it wasn't even getting an additional skill. And I'll tell you how it happened was that she had kind of learned on the job and so, because she had walked within a company and hadn't been hired in directly for the role that she was in, they had just always been kind of underpaying her as she had been gathering these additional skills and she just didn't realize it.
Speaker 3:Right, yeah, and then if you move to another company many times you will actually be compensated more fairly and then it's easier to increase pretty rapidly.
Speaker 1:Yeah.
Speaker 3:Yeah, if someone's listening today and is feeling overwhelmed about their financial situation, what's one piece of encouragement that you would give them?
Speaker 1:Yeah. So I really encourage people who are feeling overwhelmed to get stuff out of their head and to write it down. So what are you actually feeling overwhelmed about? Are you worried about paying the bills? If you're worried about paying the bills, let's get super crystal clear on what bills are coming up, what income is coming in and is there a gap. If there's a gap, let's create a plan to fill that gap. Right, and I think the more that you can really have a plan to address these concerns.
Speaker 1:Sometimes they're just worries that kind of keep you up at night, but they're not really based in reality. So when you actually go through the numbers, all right, I'm okay. Like I might not be as comfortable as I was before, maybe I can't afford some of the lifestyle things that I could before, but I can comfortably pay my bills every month and I'm okay and I don't need to be quite so worried. Right. But sometimes we have to make a serious change.
Speaker 1:You know I've worked with people who have had to get out of car leases or, you know, downsize their home or, you know, do some big changes to their fixed expenses to be able to be in a more comfortable position. Most of the time when I, when I hear people are financial overwhelmed, it's typically a cashflow issue most of the time. And so that's you know, money coming in versus money going out. And how confident do you feel like you have more money coming in than going out. But it's an equation, right, and so we can get down to the bottom of well, do we have enough to cover everything and if not, what changes need to happen? And again, the more you just write that down and have a plan around it, the more it reduces that overwhelm.
Speaker 3:Yeah, I think anytime we're putting it to paper and seeing the actual numbers can really reduce a lot of that anxiety.
Speaker 1:Yeah.
Speaker 3:Well, it's been such an insightful conversation. Thank you so much for being here. Before we wrap up, can you share how our listeners can connect with you and access your resources?
Speaker 1:Absolutely so. I have tons and tons of free resources on my website that I do hope people will take advantage of, because we put a lot of work into providing resources for people. You can go to intentionaldivorcecom and access all the free resources on our website. There's a link to the podcast, Intentional Divorce Insights there, which we've had wonderful guests, including Carrie, who give a lot of good information. Just lots of free content. So I encourage people to take advantage of those things.
Speaker 3:Perfect. Thank you so much, leah, for your wisdom and helping people navigate the divorce with confidence. And to all of our listeners, remember financial clarity is possible even in the midst of change. If you've enjoyed today's episode, please be sure to subscribe, leave a review and share this podcast with anyone who might need it. Until next time, take care and keep moving forward.
Speaker 2:Thanks for joining us today on this episode of Divorce Diaries. Remember, every journey is unique, but you don't have to navigate it alone. But you don't have to navigate it alone. Visit JacobsonFamilyLawcom or call 443-726-4912 for support and guidance.