Wealth from Wisdom

Before You Go Your Separate Ways: Financial Planning for Divorce

September 21, 2019
Wealth from Wisdom
Before You Go Your Separate Ways: Financial Planning for Divorce
Chapters
Wealth from Wisdom
Before You Go Your Separate Ways: Financial Planning for Divorce
Sep 21, 2019
Carson Wealth

In 1992, the divorce rate in the U.S. was about 4.8 per 1,000 marriages. In 2019, it’s at 2.9 per 1,000. That’s still one in every three couples. But just because it’s common doesn’t mean it’s simple. 

There are many laws, emotional issues and financial planning questions specific to divorce that everyone must answer. 

On this episode of Wealth From Wisdom, we’ll look at some of the key financial planning decisions surrounding divorce. While no one likes going through a divorce, understanding how to best approach this difficult time is incredibly important. 



Show Notes Transcript

In 1992, the divorce rate in the U.S. was about 4.8 per 1,000 marriages. In 2019, it’s at 2.9 per 1,000. That’s still one in every three couples. But just because it’s common doesn’t mean it’s simple. 

There are many laws, emotional issues and financial planning questions specific to divorce that everyone must answer. 

On this episode of Wealth From Wisdom, we’ll look at some of the key financial planning decisions surrounding divorce. While no one likes going through a divorce, understanding how to best approach this difficult time is incredibly important. 



Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced in wealth from wisdom with Rod Carson are for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consulted, qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principal. No strategy is sure of success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm, LLC and SEC registered investment advisor.
Speaker 2:
0:30
The stock market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 skyrocketing cost of healthcare and retirement could now run 350,000 you've worked hard and saved for retirement. That's great, but it's what you do with that money that really matters. Welcome to wealth from wisdom with Carson wealth. Carson wealth is a bear and hall of Fame Advisor at recognized by Forbes magazine as one of America's top wealth advisors and they're right here in Omaha. This is where you can count on straightforward and objective advice that can help you make the most out of every dollar you've saved for retirement. Welcome to wealth from wisdom with Carson wealth.
Speaker 3:
1:14
Hey everyone, and welcome to wealth from wisdom. This is Paul last until you, I'm joined by our vice president of planning, Aaron Wood. Everybody have you back on the show? Always a pleasure. Yeah, you're fun to talk to. And uh, sometimes what we think about here on wealth of wisdom is we have to look at those key financial planning decisions. And for those of you that are listeners, you know, first thank you. Um, too. We appreciate your feedback. Uh, then you like about that we talk about real world topics that we're not going to just tell you about the best stocks or bonds or funds. We're going to tell you the truth about what happens and what happens is unfortunately, life happens right here. And I mean, just things happen, good and bad, do all of us. So an interesting stat I want to share here with our audience.
Speaker 3:
1:57
In 1992 the divorce rate in the United States was about 4.8 per 1000 marriages in 2019 it's at 2.9 per 1000 but that's still one in every three couples. But just because it's common doesn't mean it's simple. Um, and there's many laws, there's emotional issues or Spanish channel planning questions. And when people are going through divorce, um, stress and all those things happen and you, you think it may not happen to you or I talk about on today's show is your friends, your children, your grandchildren, everybody knows people who are impacted. And we want to talk about what are some of the right strategies for you to talk about. And we're not talking about the legal x's and o's. What happens with your money? What do you do? How do you approach it? How can people help you understand? And Aaron, what I like to do is, you know, really talk through this.
Speaker 3:
2:57
Um, and I think to be open with everybody, something you've probably never talked about on the show as though you've experienced divorce. I have that. It's been quite a few years ago now, but it's still very, you know, raw sometimes the amount of a turbulent you'd have going through. Uh, we've all seen individuals go through these situations and you go through a period where emotionally you're wrecked and no matter whether it's a, a good decision for the two of you, there's much more to it than just some simple signing from paperwork. But people hear me say all the time, my least favorite word of the vocabulary in English language is the word busy. Cause I always talk about are people good, busy or bad busy. And sometimes, you know, when I think about, we see a lot of people come through our doors here at the Carson group that unfortunately have gone through a divorce.
Speaker 3:
3:44
And again, life happens. Just realize it. And sometimes there are good divorces that it's just, it's probably the best thing. And there's sometimes there's just bad ones and like go from bad to ugly. You tell much worse. So we want to give you some guidance today on wealth from wisdom on how to help people think through this. If you're your family or someone's going through this decision. And by the way, don't assume that Aaron, what your personal experience, don't assume everyone else is going to go through the same exact experience because each one is a different situation, different. And you know, in our position we deal with so many families. I do have some insight from what I've seen from myself, but I have to tell you, I have way more insight from what I've seen from working with our clients who at the many years in the different situations they went through.
Speaker 3:
4:28
Yeah, I mean, so anything that happens, bad life. If you have a death, what do you do? You Call Your family, you call your faith and then you serve beginning to call your other trusted people. Absolutely. In the divorce, what do you do? You call first your most trusted person that you know, you can yell and scream and cry and go through all of your waves of emotion and then you need to start putting together a team. So let's talk about that. You know, one of the things we like to teach in wealth from wisdom is what are the best things to do? Number one is you got to put together a team. Of course, the first thing is everyone asks is, okay, what attorney or attorneys should I use? Right? How would you go through that process? So we were very fortunate in the sense that we both had agreed that this was the right thing.
Speaker 3:
5:08
And so we were in a community property state, which I know we'll talk about later what that actually means, that not hearing at Frasca but a lot of states are. And so we were able to go through really and look everything up being very logical about what was being divided and how, uh, and we went through one attorney. But what I typically see is, uh, you know, mediators are involved. Sometimes you have children where you have guardian and lightens involved. And then you have two attorneys that are going through and trying to do what's best for each one of their individual clients. So your scenario is definitely, probably are not, not the common. Um, but I think for a lot of people is all right, they're mentally going to have to begin to brace, to hunker down. And what I first tell I want is rarely does it go faster than you think it's going to go.
Speaker 3:
5:59
Even with how collaborative ours was, it still took us 11 months. [inaudible] for probably the best case scenario possible. Yes. Um, others can drag on for years, years. Um, and then it takes time because a lot gets involved. So again, when I would tell you is, is your first part of your team is you're gonna put together a divorce or family law attorney put together someone that has actually specializes in this, understands the complexities of the roles. So we of course, as a financial planning company, who do we refer to? Attorneys, estate planning attorneys, somebody who can help us with a state document. So your wills, your trust, your healthcare, power of attorneys, all those things are part of your state. If somebody has a corporate litigation matter, what am I going to do? I'm going to send them to a corporate litigation attorney. Don't assume that because someone's your friend, oh, they can help me, they're an attorney.
Speaker 3:
6:56
I'm going to save some money. You're probably costing yourself money. And in those situations where they don't understand the processes and how all this works. And quite honestly, you have people who are very emotionally raw and sometimes we know emotions get the better of us and we make really foolish decisions in those times. And so having an attorney who is collaborative and can help you through and not only those financial mistakes you might be making, but to control those emotions and make the best decision for the long run and can definitely see, I mean, I think when you think about the attorney that first of all, they're going to have to understand everything that's going on. Of course when their children are involved, now you're dealing with custody support, visitation rights. But those are some things. But then also who's filing all the documents with the court, who's helping you go through the separation of property, who's helping you do the financial assessment and building, you know, all of your, uh, net worth documents and walking through.
Speaker 3:
7:50
Uh, and then could include valuations. So I'll give you a great example. So what of you right now, you or your child, you know, owns a business, don't you think you should ask your divorce attorney? What specialties are, how many other business owners have they dealt with? Because business valuations of course can be a very critical component of this. They're a huge piece of it. And it is something I dealt with. I owned a financial planning company at the time and so we had to figure out how that was going to be evaluated. And it's not as simple as, oh, I think it's valued this and your x is just going to believe that or know what that is. So you do have to get a specialties involved to be able to do those evaluations correctly. Yup. And so I would also say, you know, so getting that right attorney in place and getting someone who's going to communicate in a language that's good for you.
Speaker 3:
8:37
So again, we're in the modern world here where some attorneys are great at communicating electronically, some are not. So, but also figuring out your preference. I'll just give you an example. You know I'm currently working with a family that's going through a divorce process. The one person is really good on the phone. The other's really good with email. Yeah, that's a problem. That's very wrong because it's not efficient. So we'll pay, I always look at like my children do this, right? You call them and then they text you back. They're not going to call you back. Well it's not good as you call your attorney and then you just keep emailing you back and you just want to talk something out or vice versa, they call you. And something that could probably be solved in one minute on the phone, but you don't want to talk to them cause you think your meters running. Yeah. So what do you do? You get on a computer and you type up and you send an email. And so figuring out what's the best communication. But then second, you need to get the right wealth planner or financial planner on your team. Somebody that's going to help you think through the DV Knob of assets in which ones are gonna be
Speaker 4:
9:38
best for you. And I'll also point out here, this is one of those areas that we ended up working with individuals a lot about what is really the importance of some of these items. People start fighting over something and you know, you're fighting over this piece of artwork that's on your wall. And so instead of just maybe saying, you know, really it's not that important. You, you, you're angry and you're sticking it to them. And so you keep fighting and that attorney bill is getting wrapped up. And so what started off as a a thousand dollar photo on the wall is now $10,000 in attorney bills. And so really having someone who is that financial advisor who can go through and be honest with you about how important are these and what are the consequences of fighting over some of these items. And then the other parts less. You don't look at things like retirement plans and pensions, a, what does that mean to social security? And, um, are you going to be okay as those individuals?
Speaker 3:
10:27
Yeah, I mean there's so many different complications you're going to have and thinking through the retirement accounts, annuities are often in play for people. Uh, and so when I look at this for families, you better engage them earlier. Um, but awhile, so until you just don't share a financial advisor. And like for us, we don't want to be conflicted out like, and we've had situations where the spouse want to stay with us. What we'll do is we actually change and have one of the advisors work with one person with another. Okay. You remember Carter at Carson, we're a fiduciary. So we have a legal responsibility to also give you advice that is in your best interest. So therefore that's why we would separate that responsibility here because we always want to give the best advice. So then third, in other part of your team, how are you doing in life?
Speaker 3:
11:12
You've got to have a team based approach to help you out. Is is do you need some people who can help on the emotional side, whether it's therapist, a divorce counselor, or even, uh, go onto your faith and look onto your pastor or some other religious person can help you cope with it really is okay for a lot of people can be lost in grief. Others there can be celebration and jubilation. Um, but just like a specialize attorney, therapists can also help because they deal with this stuff all the time. They know how to answer questions. They know how to assist. They know how to really, I was also saying, listen.
Speaker 4:
11:43
Yeah. And understand what happens there and they're unbiased. Yeah. That's huge. You know, our friends are great, but let's face it, our friends have allegiances to one or the other spouse as well
Speaker 3:
11:55
in your faith doesn't, yeah. So how many times did you call up your friend? I'm like, oh, I got to tell you what Paul did. I'm going to tell you what Aaron did, right? Everybody's like, oh, that's terrible. That's terrible. Somebody else actually, you would actually tell these assigned, you know, they're really good friend. If they said, you know what, Erin, you need to calm down a little bit. This isn't that big of a deal. [inaudible] I have more respect and trust when people do that cause I want people to tell me the truth and I know there's a time, I think when the divorce first happens, for a lot of people it's about, okay, you want to help them grieve and you want to help be their sport, but then you also have to help talk them through this and a lot of people I want to share with you that there's a guy who we can help people through this process. We actually publish it. It's on Carson wealth.com forward slash divorce. You actually will give you a copy of our free divorce. Financial Planning Guide is complicated, but let's try to make the financial planning all of that simple. We'll be back for a moment on wealth from wisdom.
Speaker 2:
12:49
Do you own an annuity? Inflated fees and commissions could be costing you an arm and a leg. Get straightforward and objective advice from Carson wealth by calling (888) 419-8513 are you caring for an aging parent? Are you concerned about the skyrocketing cost of healthcare and longterm care? Or do you have questions about how to best manage an inheritance? We can help call Carson wealth today at (888) 419-8513 and now back to wealth from wisdom with Carson wealth.
Speaker 3:
13:19
Welcome back to wealth for wisdom. This is Paul last. Today I'm joined by Aaron Wood and we're talking about a topic that maybe other financial planning companies aren't going to talk about, but we're realists here. Life happens and sometimes bad things happen or good things happen. And then the lens you're looking at it. Now we're talking about divorce, and you may be like, well, why are they talking about that? Well, either you've experienced it, a family members experience, or a close friend. I can't need anyone. You've never met anyone. So right now, if you're driving on the road or you're listening to us, I'm sure you can think of two people right away that have been divorced. Oh, absolutely. Yeah. And then you, then all of a sudden it started spider web. So we're trying to help share some of the best ideas because again, Aaron, you did a great job before explaining, you're going to listen to what your friends say a ton, but it maybe isn't the best solution, especially somebody who hasn't gone through that similar experience.
Speaker 3:
14:13
Yeah. Yeah. So like me, I'm a financial planner. I work with a lot of business owners and I help them think through their life events. I help them think through when they're converting the currency that's in their business into liquidity, which means, you know, cash and other things. But if you don't have an expert who's helped other people like that, I think you're making a mistake. So we talked about putting this team together here. There's a reason why we're like, we at Carson, we have a team. So you know, I'm a lead advisor for our organization and I have, you know, obviously I work with your team. So you have a bunch of financial planners in your team. We have financial planners, CPAs, attorneys, and non attorneys, I should
Speaker 4:
14:52
say. And they're a very estate focused, but we have all these resources because we have to have the full bench to be able to help people in all areas. And divorce is one of those areas we have to be able to go through and say, what's the situation as you're together and what's the situation look like when you're no longer together and apart and having that bench strength of the CPA's is super.
Speaker 3:
15:13
Yeah, well I mean and that team based approach is why we're a registered investment advisory firm. That's why we're in the business of providing advice for a fee. And it was exciting and earlier this week, Aaron, we got to see a Carson a wealth here. So we just moved up the barons rankings overall from the 24th to the ninth ranked firm in the country. So super excited for that. Just a testament to our entire team across the country there.
Speaker 4:
15:36
Let's say congratulations to you as well. You are on that list for the independent [inaudible].
Speaker 3:
15:41
Yeah, well it was very uh, thankful. I appreciate that. I just got a great team. Everybody does a wonderful job and how we can help families. And you know, for me it's uh, you know, it's very, I would say personally rewarding, but it's so I'm so excited for everybody we work with because that means we're delivering on the value we're supposed to. It's what consumers want and they're learning more and more. I was on a trip recently and people asked me, somebody on the trip said, hey, you know, do these people still actually really invest with these wirehouse firms? I said, yeah, because they don't know any different. But I said, we're making movement and we're green, gaining traction as being fiduciaries. And I think the more and more people understand we can help them. And the reason why people come to us as I hope you hear in our voices, and this is why people go to our website and ask us questions@carsonwealth.com is because we're going to respond to you with the truth.
Speaker 3:
16:33
If we can work with you, great. If we can't, then great too. But I'd rather know when somebody's trying to sell me something. Speaking of that, I have to tell you real quick story before I keep talking about divorce here for a second. So somebody said to me, who's a client of the firm here? Hey, my neighbor works for Northwestern mutual, and so they're trying to help me buy a life insurance, but they keep saying, I need to buy it. I need to buy it. The deadlines, this date, the deadlines that day I've never heard of a deadline of. I'm like, yeah, no, not at all. They don't think good. And by the life insurance anyways, then through underwriting, so here's what I told them. Send me your information that they're proposing to you. And as a fiduciary I have a responsibility to tell you if it's good or not.
Speaker 3:
17:15
The more importantly I'm going to help you figure out what is the optimal amount of life insurance you need. Most people, when they, again, when their main revenue in the, the, the bread and food they put on their table is based on selling you insurance products. They don't sell your the optimal, they sell you the maximum. Yeah. Yeah. I hope, I hope everybody knows and understands that. So let's go back to divorce. So let's talk about these three stages. So really complicated before, during and after. So let's talk about before. What do you need to do? You guys just got to get your ducks in a row. You gotta have all of your documents together and really began the communication process, taking the right steps to protect yourself, your financial assets and your credit rating.
Speaker 4:
17:57
Step on that credit rating for a second. That one is extremely important, especially when you're going through really volatile divorces. Knowing what is on your credit report, that is an absolute must only that credit report. Knowing what is on there at that point that starts all the way to the end. You're going to want to make sure that no new cards are open up, no new debts you didn't know about. Uh, especially in these volatile divorces. That is super important.
Speaker 3:
18:20
Yeah. Did you hear Aaron? I don't know, m d some people have or heard recently or even locking their credit. So trying to protect it that way as well. Yeah.
Speaker 4:
18:30
Credit locking has become really popular, especially with all of, you know, the stealing of passwords and hacking and all those things that have went on a locking has become much more common that it was, I would say even five years ago. Uh, and so that is always something to keep in the back of your mind is just a good precaution. But when it comes to things like, uh, spouses especially, you know, someone had a credit card at, I don't care, JC penny's and the other spouse didn't know about it or someone bought another car. Those are things that they can easily creep up and can bite you when you're not expecting.
Speaker 3:
19:02
Yeah, for sure. And so nothing to think about before this all happens is income. So what's going to happen if you have a one income household or a two income household, uh, you better be cognizant of that because of assets and where they are. So as you move from stage one to stage two of OK, now you're, now you're in the process and Erin shared, you know, she's had to go through this experience. It's you, you said you had a great experience. You said it took how long, again? 11 months. 11 months.
Speaker 4:
19:29
It's actually the average of how long a divorce takes. Okay. Some states have what they call cooling off periods, which the state I was in actually had. And so you have to wait six months. There's a cooling off period in that state, but every state has their own rules, but the average is 11 months.
Speaker 3:
19:45
11 months on average. So 50% or less, or 50% or more. Right? A and so that's why you're here. They take a lot of time. But I think a big thing you have to start working on is figuring out during the doors, uh, who owns what, who titling your assets is one of the most important things you knew. Aaron, your team does something that I think is really neat. So in our financial planning software, and we're going through the balance sheet, each column actually has the person's name and who owns what.
Speaker 4:
20:16
Absolutely. And you want that for multiple reasons. Uh, you know, one in every couple other to happy manager London unfortunately is falling apart. Uh, it, no one ever wants to see it being one-sided or lopsided. And so you have those situations where, you know, for example, maybe a business owner is the one who owns the majority of the wealth. Uh, well the non business owner still wants to partake and feel valued. And so many times as trying to get the estates implies, uh, made sure for state passing purposes. Uh, but everyone wants to have buy in on their net worth and their balance sheet. And so if one person has a really big retirement account, uh, making sure you know who owns what, uh, is always an important thing.
Speaker 3:
20:57
Yeah, it absolutely is. I mean, it's also as you're putting the things together. And so I think the beauty of this too is I think we have to be good storytellers and communicators. I know one of my favorite phrases here is, is we have to be just as good educating people about their investments as we are actually managing them. So think about it. People want to understand, uh, I was actually having a client review earlier this week. Um, you know, and unfortunately this person's gone through a life event and you know, one of the things they told me was everyone else has spent time with me talking to me about returns. Paul, you're actually taking time to explain the risks that I could potentially encounter. And she told me interesting things. You said, you told me a story. You said it's June, 2020. It's in the summer and your $2 million account, for example, is now at 1.5 million.
Speaker 3:
21:52
It's the summer you're with your kids. How do you feel different story, right? It is because I'm helping paint the picture for people what that looks like. And so as you're going through this process, you actually have to forecasts long on, all right, let's imagine five years from now you don't get everything you actually think you're going to get. I know you feel like you're going to get 80% of the assets and you deserve it and you're going to get, um, the children full custody and all of these things. What if it's five years from now? And that's not the case. What does that look like?
Speaker 4:
22:24
Hmm. And that idea again of people being angry or upset and they come into this and they really think, you know, again, I'm going to stick it to them. That's really not how it usually shakes out. Almost everything ends up being 50, 50, whether, you know, it's the numbers or the children, what you see the results. It's almost always that, uh, somewhere in the middle.
Speaker 3:
22:45
Yeah. And I would share with you, um, you know, one of the things you have to think about is not, not very many are amicable. Right. At the end of the day, some, there's some point of contention that's what caused the divorce process to begin in the first place. But if you're really going to work it out, remember that. And I go back to hiring the right attorneys that if you like, well, hey, if you and I are going through across Aaron, if I said, hey, Aaron and I have essentially agreed, I just need you to solve it. Um, well it doesn't always get solved quickly. And I know a lot of people get frustrated with their attorneys. Yes, they do. And so I would just say, if you've experienced this, I would just tell them, you need to be very direct as like you even say, the attorney's job is to fight for the maximum for you. So even though you say, Hey, I want to sell this quickly, they're going to dig their fever heels in too. So give them guidance. You know what, I don't need you to dig your heels in on x or on y part of your negotiation in terms of dollars or custody or whatever it is, because they will, and then they're going to sit there and spend extra hours and then thousands of dollars of your time if you don't truly give them that guidance.
Speaker 4:
23:53
Yes, they will. You know, your attorney will always do what you tell them you want them to do. But you have to be very clear with that. And when you're angry and you're telling them that you want to fight, they're gonna fight. But if you're telling them, you know, I, I really want to come in and collaborate that they're going to collaborate. But the other side of that is there's another person on the other side talking to their attorney as well and you don't always know which side they're picking. And so that's where that frustration happens is most people think, ah, they're going down one path and the other spouse who you know is leaving the marriage is going down a different path and it can get really costly quick.
Speaker 3:
24:29
Yeah. I mean a mediator could help are great. Yeah. They don't always help [inaudible] so I think you have to be smart about this when you look at it. And I think as we look at divorce, it's really, I mean it can be one of the most painful changes in your entire life and if you have questions about how to value the assets or what those look like and you don't want to get charged from an hourly fee or you want to ask us those questions, you can email us at info at carcinoma com or are you going directly on our website? You can submit a question there. We'd be happy to answer those for you because even if your divorce was a long time ago, you're going to run into someone else and I'd rather be armed with the right information then making a mistake on such an emotional event. So Hey, you're listening well from wisdom. We're going back to the moment talking about more planning techniques here.
Speaker 2:
25:14
Any major decision in life is worth getting a second opinion and financial planning is no exception. Let's talk about how you could make your money go further in retirement than you ever thought possible. Call Carson wealth. Just schedule your free initial analysis now at (888) 419-8513 do you have a lot of assets but are short on cash? Learn how you could leverage your assets to free up cash with Carson wealth by calling (888) 419-8513 and now back to wealth from wisdom with Carson wealth.
Speaker 3:
25:47
Hey, welcome back to Baltimore Wisdom. This is Paul last joined today by Aaron Wood. Hey, we've been talking about a really how to avoid some of the mistakes people make during the divorce process and really more importantly is your friend and family. How do you give better guidance to them, uh, through this process? So, you know, one of the things is, we were talking in the last segment was, you know, talking about the during, before and after, but I'm not talking about the after here. And one of the biggest mistakes we see people make is they don't actually update their wills, their trusts in their other documents cause their fisheries. Yes. Or their beneficiaries because they're, they're tired. Fatigued, right. They, um, just got through it. I just saw one and it, sure. This just in the last year that not only was the wheel not updated that it was like from a two people before. Yeah. Decades. Right.
Speaker 4:
26:44
And so just don't make that mistake. Don't feel like I'm so tired of paying this attorney money. You're bringing the divorce during. It doesn't mean your state documents get updated or your power of health. Um, that's another one. Do you know when you don't update those documents and something does happen, and your ex spouses now responsible for making healthcare decisions for you. Yeah. Wow. You imagine that your hospital and your ex is now making your decisions and your life and you could be married and your new spouse can't make that decision. Correct? I, I'm certain that's had to have happened to people. Yes, it has. I have seen a situation personally where that it was a second longterm relationship, very long term, like 10 15 years, and they did not get married in the documents were all still a previous spouse. Amazing. Yeah. So you may be listening to show, say, Hey, I'm not married, I'm never going to get married, or not actually me.
Speaker 4:
27:33
I'm not divorced her or wasn't going to get divorced. But you have to have friends. I mean, I'd love it if I, somebody just got recently divorced and it's settled and it's over, and we say, well, you updated your will. Right. Or you updated your healthcare power of attorney. I think I would appreciate that if a friend of mine said that to me because I know they're actually looking out for me. Yes. I on the other hand, would appreciate if my ex did not update his life insurance and then, you know, 40 [inaudible] well probably he's probably not listening to this. So, um, I would say that would be a lot of things. So unfortunately that would be a mistake on his part. So let me ask you this. You've gone through this process. What are some common mistakes you think that people need to avoid?
Speaker 4:
28:17
The first one is closing the lines of communication. Uh, you know, people are the hurt, they're angry, they're tired, but they, they tend to close down and just stop. I'm trying to communicate and once that happens, things get missed. Uh, that's where, you know, the attorneys aren't necessarily getting things done right in really, even if you're, you're so angry, you have to talk to the attorneys and still just trying to find a way to keep that communication open is really needed. Especially, um, even when the divorce is final, your communication is going to be around for awhile and you're still going to have to file taxes at the end of that year. Many times there's children involved. Uh, and you know, some people just don't ever get over it and that's hard. Um, and you see instead of just trying to find a way to communicate taxes, I have that we're going to make it through all wealth from wisdom episode without talking about taxes.
Speaker 4:
29:05
Well unfortunately no, cause that's probably the second basis sake. Yeah. Because people don't realize that they do still have to file taxes together. And so you know, you, you get divorced in, in July, well guess what, next April you're still dealing with each other cause you still have to file [inaudible] form and senior names right next to each other and you're clicking the box married filing joint like yeah. Again, even though you're going through the process, usually it would ask what's best for them. Yeah. Usually what ends up happening is you need to work with the CPA because you typically will have to file two tax returns for that year. So you'll file part of the year is married filing jointly and part of the year as single. Yeah. So something
Speaker 3:
29:42
that's like w what are there other common mistakes that you're seeing for people?
Speaker 4:
29:45
Ah, people trying to live like they did before. So not creating a new budget at that one is a, unfortunately, you know, you get used to a certain lifestyle and people just continue that lifestyle without looking at a what's realistic for them now. Uh, and it will, it will catch up with them. That's, that's a hard one.
Speaker 3:
30:04
Yeah. And I think that's, I don't know hard for people who are divorced, but it's also hard for widows because if they were used to living a certain way, especially if the person that was alive was helping with income, uh, changing your lifestyle because your support network is probably also living the same lifestyle. Anything that you, you, you surround yourself with friends like you. Correct. I mean, that's, that's human behavior again. So now if you were so used to always going to the country club together or going for coffee together, whatever you're doing and, uh, your budget no longer allows it,
Speaker 4:
30:38
that's hard. Yeah. And you know, there's other people who they find a new lifestyle too, right. And so they might have had the income before to to go on those vacations or meet those new friends, but they might not have that income anymore. Yup.
Speaker 3:
30:51
Not when it's hard. So, uh, you know, one of the things I hear, Aaron, I'd love to get your opinion on this is how frequently is the split in one spouse's or the other? Staver
Speaker 4:
31:03
so it depends. Uh, there are the states, like I had said in our last section that a community, property, states, community property states are typically 50, 50. And there are some things outside of that though. So when you're looking at things you came into the marriage with, so if you owned a home before you came into the marriage or you had an investments before you came into the marriage, and those can typically still be counted just as that individuals. Uh, but there are other items, like if you've got an inheritance from family, so there's some items that you definitely can keep outside of that 50, 50. Uh, but anything that really was truly brought into the marriage and took both of you to be able to bring those assets in are going to be considered 50, 50.
Speaker 3:
31:43
Okay. Um, and do you do, so you said yours was fast and you did it in 11 months. Yes, but there's cooling off states. Um, how many community property states are there now? Do you know? Approx approximately. You don't have to be perfect on your answer here.
Speaker 4:
31:59
Uh, eight, 10, like eight or nine. Yeah, so I said eight to 10, somewhere in that same range. It's most of them that, um, are the southern states. So you take, you know, the, um, bottom part of the United States, enough towards the west coast. That's where the majority of them are at. Uh, and then you have a Wisconsin in there as well. Um, but that's,
Speaker 3:
32:18
I know California is, I know Texas is, there's a lot of big states where your kids or grandkids may be. So getting, don't assume, I mean we're from Nebraska, don't assume what happens here in Nebraska is going to be the same as in maybe Wisconsin. Yes. Do you have different states and things? So, um, do you use, how often do you see or hear about where people want to get it done so that whatever the first proposal is, they say, yes. Does that happen or do you hear about that?
Speaker 4:
32:46
I have heard that. I, I will say what, when I see that happen most frequently is when something really emotional, really negative has happened. Uh, you know, lots of times there's people who are just so angry. Um, they want out now, uh, you've seen that in cases of, of infidelity or, uh, and when I say fidelity, I mean that in many different span, you know, people are hiding money. Uh, they're hiding how they're spending their money. Anything that makes someone really feel damaged or neglected, and those are the ones where they just want out. They're running away as fast as they can and agreeing to something when you're in that kind of emotional, distraught is a really bad idea.
Speaker 3:
33:20
Yeah. Well, I mean, we talked about all the time is I don't recommend when people want to make emotional based decisions with their money that I don't think about the stock market. I mean, so when we have days where the market's down 2% people and you know, the online brokerage just see this all the time, they get way more sales than any other day. Oh yeah. So if smart people what, buy low and sell high, then why are so many people selling when it goes low? It's simple cause they're scared. Yeah. And they're making an irrational decision. I mean you, you've, you've just completed a program, so excited for you. I mean tell a little bit what you've done and just with the behavioral field. So I just
Speaker 4:
34:01
finished up my, um, fi financial psychology and behavioral finance, uh, designation certification, uh, in so much of that is just talking about the ways we learned money and how we make decisions emotionally and money more than anything is truly an emotional decision. And part of this that we haven't really talked about today, um, is the shame that comes with that. And you know, once you go through a divorce, whether you, you had the money, uh, and now you don't, or you have a different budget, um, people feel very shameful. And so you look at people who, uh, no might've had good jobs and now they're starting over and out. They're embarrassed and they're ashamed. And it's an very unfortunate thing. But I think if people are more open, uh, that won't happen as much. I can tell you I was a financial planner and here I was starting over. Uh, that was very hard to think about going from a life I had to a new life as an independent person. Uh, but you recover in the morning, you talk about that and help each other, the easier it is.
Speaker 3:
34:58
Yeah. Well, you've been a guest on the show multiple times. Aaron, I think I've lost track, but I think you deserve like a special plaque or something now for all you've done, but you've never really taught you, I would say really, I don't know if you've ever talked about this topic, so I appreciate your transparency here with us today on this. Oh my pleasure. I was important. But I think taking your knowledge and information you've helped us put together divorce planning guide. So what we've done is we've put that out on our website. It's for free for people. So if you want it, you gotta look at it. Some of the tips and ideas and tricks and Aha pitfall avoiders, uh, are out there. So is Carson wealth.com. Uh, you can click on four slash divorce or if you just want it, there's a divorce financial planning guide icon out there. Tell you, understand more.
Speaker 4:
35:38
I mean, it's traumatic, it's hard, it's emotional. But that's what wealth and wisdom is. And sometimes wisdom comes from bad things or bad life events. And we have to share those with you. So you're listing wealth of wisdom and we're going to be back in a moment. Have you ever wondered how do other people get away with paying fewer taxes than everyone else?
Speaker 2:
35:55
Learn how you can save thousands of dollars in taxes by calling Carson wealth
Speaker 4:
35:59
at eight, eight, eight, four one nine 85, 13.
Speaker 2:
36:04
Social Security risk, taxes and healthcare. This is where you can count on straightforward and objective advice on the biggest challenges with investing for retirement. And now back to wealth from wisdom with Carson wealth.
Speaker 4:
36:19
Listen well for wisdom. This is Paul. Last cohost today is Aaron Wood and Aaron. We've been sharing, uh, ideas and information with people about when life happens and one of life events that happens is marriage. And sometimes marriage doesn't go well. And we've all seen this statistics, I've actually talked about them. Uh, but something's been happening as we look at over this last generation. And that is more people are getting divorced over the age of 50 than ever before. Yeah, I mean, I just saw the numbers here. Spending a number of people who have done this has doubled since the 1990s. So just 20 plus years ago. Uh, so while divorce for younger people has gone down over the last generation, this one's actually gone up as do a lot of variety of factors and what's happening. And, and by the way, the later on this happens in life, the financial complexities are just going to be that much more severe.
Speaker 4:
37:16
Right? Well, and there's a couple of different things that I think are happening in these types of situations. Uh, you know, we have a lot of people in their fifties who that is when their kids are now graduating from college, getting married. Um, most people we saw it, you know, a few generations before it was the kids left high school and then people were getting divorced. Now we're seeing the kids who are leaving college and the kids are getting married and now the people are getting divorced. So some of that delay I think is just from the change in lifestyle that we've had in the generation of people going to college and getting married later. But the other part of it is, you know, most families now have these dual incomes and even if you do have two married individuals, unfortunately the women last the times I've had much lower earning potential, whether they've stayed home with kids, they've take taken a leave to take care of family members, uh, or just they, they made less. And so getting divorced in your 50s definitely has some complexities to it. Of those budget items we talked about earlier, I was looking at how does it affect your social security. And definitely if you don't have those retirement assets, that net worth statements very heavy to the other spouse, it really can affect the women going into a divorce in her 50s. Yeah, I mean there's certainly, there's going to be the potential for either way. Another way to frame it is what you just said. It's a wage gap between a potential potentially, but also,
Speaker 3:
38:37
um, if somebody, you know what I would say did a, all the other part, the 24, seven parts stayed home with the kids and help the children. And so they haven't worked in 25 years or whatever. Uh, it's different work. First. It's a different world and so it may be more challenging and income potential may be very different. So, uh, unfortunately, I don't know if this is good or bad, a nickname they called the great divorce because you get gray hair and people are doing it. Um, and you know, at the end of the day, people are living longer. So now when this happens, and for me, I don't know all the stats behind this, so I don't want to sound like I want to comment on all of them. But for me, I think that's part of the reasons why you're seeing more is people are saying, you know what, I'm gonna live a lot longer than other generations potentially. So if I'm dissatisfied or there's a problem in my relationship, then I'm okay with getting divorced at age 55, because I'm going to live to 85 I got third, people are probably sitting out. So I got 30 more good years left, so I'm going to make this decision. Yeah, I absolutely,
Speaker 4:
39:45
well I think that's part of it. And you know, looking at people at that age, they're still traveling, they're doing not you. We see people go into retirement and these are the times where we talked about those bucket lists and those, you know, we wanted to do this forever list. And so at 55, people are still able to do that. Or uh, at 50, they're still capable of working, traveling, doing all the things they want to do. And sometimes that's just the point. They've said, I'm going to do this.
Speaker 3:
40:11
Yeah, well, I mean just it's, you know, for fiduciary financial planners here at the end of the day, I'd still obviously recommended them. They, that they exhausted everything in their power to try to make it work, that they try to help figure it out. I'm just looking at the financial, I don't look at the emotional, all those other things. But I mean, the financial losses are going to be hard. I mean, think about investing in a 401k and starting at age 55
Speaker 4:
40:37
well, and even if you haven't been a person who's worked now finding a job at 55 that that can be quite difficult as well.
Speaker 3:
40:44
Yeah. So we shared this all the time. So a lot of people come to us and I asked them, what age do you want to retire? Why? Because it helps me tell their psyche. It helps me understand what's important to them. So people say, I'm never going to retire. I love working. Others want to say tomorrow if I could. Most people answer the following number 65 so why do you think the answer that way, Aaron? Because that's when Medicare starts and it's probably close to when their social security status. Yes. No complication that farmers are a predefined in Georgia. It is. But here's what we see. Do people retire? Do most people retire before or after their target age? Before. All right. I was trying to trick you there. You're giving me that low. I'm like, wait a minute. No, it's true. And not always because they want it to be exactly right. Health issues. Yeah.
Speaker 4:
41:34
And Jab elimination happens frequently. If people were not landing on those two things.
Speaker 3:
41:39
And so you can, we see it all the time because people come to us and they're 60 to 62 years old and their position's been downsized or oh, maybe they're part of a bank's early retirement, you know, questions. So a lot of people come to us as a fiduciary, say, hey, can you help me evaluate my early retirement program? Is this something I should do? It was like I wasn't gonna retire, but does this package too good to pass up or was it never going to be that way? So when any company does that, I would tell you, come to us and if you want us to help with that, just go to our website, click on connect with us, we'll help review and we'll tell you what makes sense or not. Should you take the pension shoe, do you take the lump sum? How do you approach it? No, whatever than we're telling you what the divorce, how do you divvy up the assets? How do you make that make sense? Um, but also I would tell you, you're your, here's a mistake. So one of the things, I'm sure it's probably not planned well for divorce, especially for this great divorce, but what about health care costs and medical expenses? How do you calculate that?
Speaker 4:
42:40
And that one is a big issue, especially if, again, one of them is not working. So in this situation where the woman might not be working and she was on the husband's insurance and you're in your 50s, while you're not old enough to go on Medicare, you will get a a time period where you can go on. Um, the ex spouse is usually as you know, some Cobra coverage, but you have to go out and find your own. And so if you're planning on not being employed, uh, you know, that thousand dollars a month for medical insurance on your own is very costly. And if you haven't planned for that or weren't expecting that, um, that $12,000 budget item might be way more than what you can afford.
Speaker 3:
43:18
Yeah. And some people will sometimes, you know, they're in meeting with us and, or helping consider these things from mom and dad, uh, and having to help push all those things together. I mean, that's why again, we have a team of professionals here. I couldn't imagine going into my financial advisor and all we did is talk about investments and they didn't have the depth and the breadth of the resources like we're talking about on today's show. Because the end of the day it is life and life does happen. And Hey Aaron, I know I said it earlier, but just congratulations to the entire Carson wealth organization again. Earlier this week, uh, we got ranked in the top 10 on Barron's list of top registered investment advisory firms. So I was just so proud of you and the entire team here. So it's is helping people understand, um, money is complicated but more important legal life and how we react to it. And so on today's show and we've been sharing some of the tips and tricks about tours for a second. Oh, great topic for a podcast and a show, Paul. But the reality is is it happens all the time and you have to be aptly upper prepared for whatever is going to come down your pathway.
Speaker 4:
44:26
Yes. And you know, one thing we didn't talk about today is alimony and that can be very complicated tax issues around
Speaker 3:
44:32
that. And that's really something that if anyone's going through that situation, reaching out to us so we can help them understand that as a big one. Yeah, that's a great point. People don't understand what goes on with alimony, with taxes, with travel support payments. Some advice that you should get is how much should you get in alimony versus child support? Which one is better for you? And again, too much probably content for the show is like this today, but those things need to be thought through. And again, somebody may say, Hey, I got you $5,000 a month, but do you have the right balance between alimony and child support? And those are the types of things you can really think about. If you want to help or you just want an appointment over the phone or just talk to us, you go to Carson wealth.com and request an appointment. We've got help you. Hey Aaron, thanks for your transparency today sharing your story, sharing your best practices go by as good one. You've been listening to wealth from wisdom
Speaker 5:
45:21
risk, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
45:34
Okay. And here's the legal Mumbo jumbo. The opinions voiced in wealth from wisdom with Ron Carson are for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged and may not be invested into directly. Investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.
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