Divorce and your Money- What you should know

Friday, March 30th

When going through a divorce, it's important to be mindful of your finances no matter how amicable the seperation may be.

Who should get the house? Are you responsible for his/her debt? How much of your 401K do you need to give up to your soon to be ex?

This week we cash in with expert BJ Mann Divorce Mediator and author of the book "A Better not Bitter Divorce: The fair and affordable way to end your marriage"

Reach out to BJ Mann: http://bjmediationservices.com/

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

It is seven figures it all the information may you need to dominate your finances I'm senior runners and thank you for taking a few minutes out of your busy busy day to listen to that podcast. Ending thank you to our friends at Stanley first credit union for supporting the seven figures podcast. And supporting financial education. Earning and learning go hand in hand and family first disappeared how do you and a greater Rochester community could back. OK so it. Knowing what you know now if you could turn back the clock what advice would you give yourself a good day he walked on the island. I know a lot of fuel may be shouting don't do XP don't go through thick bit it's not good at Ralph. And yes sometimes. The announced yet think that marriage is going to be awesome and you have hopes and dreams about the perfect life. Big yet. No matter how hard you try it's sometimes divorce is enough about it and you have to deal with Ed. Financially how can you protect yourself speak cash in with our expert Steve. A divorce mediator author of the book I better not bitter divorce this fair and affordable way to end a marriage she's not an attorney or financial planner or an accountant but she is years under her belt so she's gonna give us sound. Information and advice today. BJ thank you for joining a podcast thank you I'm delighted to be here divorce mediation initially this was an even on your radar let's say you can come out of college doing mess. No I worked for thirty years for Rochester telephone and then frontier and I retired as a Global Crossing. Employee I was in executives here for a thirty years. It was when my own marriage ended about 23. Years ago. That I he just knew that there had to be gentler way to cross this bridge. I was surreal huddle on the floor and mine was one of those marriages that ended pretty suddenly. And I news that there was a label called divorce. Mediation or divorce mediator. I feel that was just getting some legs in Rochester. Thanks to some real trailblazers. In the community. I still had eight more years to work the phone company because site wanted to leave with thirty years in a pension. So I along the way I began to really explore this and also recover from my own. Difficult. Transition but I found my resiliency. And I found my life's passion and I've been doing this now for seventeen years how long remarried I was married for 25 years and I find yes a look at his devastating. Well it was but it was absolutely the right decision I just didn't know it at the tying. And my kids are terrific my former husband and I are very very good friends. We share all the celebrations are for children and sometimes just the his wife and my husband we go out to dinner yeah you truly it is positions that I hold for my clients so well because I know it can be a reality. And actually that's what I wanted to for folks I wanna cross them over this bridge yeah into any. New. Independence and autonomy that is better not bitter which happens to be the name of the book that I just published. That's what are the key things to things that most people don't realize and they don't think of when you're talking about finances specific. Right the financial part is out at the practical. The number one image that he folks need to understand is that they really have warned table cloth. And now it has to stretch over to ten people. And it's hard unique one gross income eats a 100000 dollars oath if you work. And that 100000 dollars has to stretch over two tables to mess somebody's somehow going to and more table cloths. Even beyond the linen there. But typically people are already working two jobs or one job whatever it is and they got into that lifestyle that income. And they need to figure out how they're gonna make that work and by and large there's some belt tightening. And both people in my office are scarce they're scared to financially they're just not gonna have enough money. And you're scared that their kids aren't gonna have the same discretionary spending no extra curricular and Steve priests and little vacations. Any takes trying to figure out. What how you can make that work. There's a backdrop of those conversations. That are cold I plains known New York State has guidelines. Regarding how people share money between the two of damn I always call it sharing. In fact it's the labels are child support he and tour alimony. But in truth it's really how people are going to exchange money. If the house can be maintained is of very very important conversation. Who can stay in the house and yeah I triple. I'm glad you brought that up because that is the biggest thing that I hear from people that I know that have been divorced there's so much confusion and infighting over who should get the house and sometimes in the Mitt so of all the emotion in the anger you just to move out fine tipped house but. Is that a big mistake well it's it's not so much a mistake emotionally or parenting wise because. And also you still have the rights to the equity in their house. Moving out is usually impulsive and sometimes it's actually better for everybody because. As I say deer in the house can give very polluted and that's not good for kids. But there are ramifications. Of four just saying I'm gonna give that cat house to him or her. So first of all you've got to get your name off the mortgage if your name is on the mortgage and most people are jointly titles and jointly mortgaged. So it's not a flip of the switch that just says you know now Wyoming house. People confuse the title to their house which is like. The title to a car then from the loan on the house which is the more kitsch. And you need to get your name off the mortgage before you get your name off the title. So people are very confused they just say I'm gonna sign my house over to my husband or wife. And your name is still on the mortgage that's still on your credit report and that will preclude you from getting. Credit if from that mortgages and paid or just because issued debt ratio is so high. Which is not to say that some people don't choose to keep your name's on the mortgage and down the title. First 34 years maybe the kids are just gonna graduate from. High school in a couple of years and both parents decide that's the best thing to do. That works but you need to be very aware of the implications. And have. Good things in your agreement that safeguard. When their house will be sold. And making sure that the mortgage will be paid on time what people mostly to his refinanced. The house. Take the other person's name off the mortgage and at that time work out the details. Of how the person's gonna be. Heat for their house sometimes there's a lot of equity in house and sometimes not so much depends upon how long you've been there people are also confused. They think the value of the house. Is what they're sharing well they're sharing their value. Minus the mortgage news and that number. Is much smaller can be 1015. Or much larger. But you're not talking about the value of the house you're talking about the net equity current account. And sometimes it's so hard because there's so many emotions involved always is and again. You need somebody to guide you through that went Aretha mediator were. In attorney there are implications. Of that another thing you hear pretty frequently used not keep. My retirement and cheer he can keep the house writing everyday fireman and the house are equal trade offs but they're not. Because it's retirement dollars or pretax. So if you have a 100000 dollars in your retirement. Yeah after taxes. You only have about 75000. Dollars but if you have a 100000 dollars of equity in your house. That's all not taxable money so 5050 would be 50000. Dollars each. But 5050 on a 100000. Dollar retirement account. We not be 50000 dollars each would be closer to 35000. Dollars each. So they're not apples and apples OK and you need to explain that to people. You can make that trade off it's. Perfectly okay he just have to make sure you allow for the attacks. Differential. Before you just say 50000 dollars of retirement is equal to 50000 dollars and perhaps you're just not. And I'm sure this comes up a lot sale there aren't a couples who have their own accounts and then the joint account. Well you know there's the identification of what's marital money right marital money is anything that's come into the marriage. Since your marriage with some exceptions. Well it you do based on paper trailer records but by and large if you think about a couple starting out there early to my niece. And me have been married for fifteen years chances are most of what they've accumulated is what we call America. Second marriages are more problematic. Because it pro actually getting married again when you're 35 or forty. Any need to be much clearer about what you brought into the marriage and what you. You know what was accumulated during your marriage. So there are. Paper records that could help that. There's also is she getting married for the second time it might be useful to consider pre nuptial agreement it's an interesting and important. Concept. Especially if you have assets when you're bringing in cheer marriage but by and large if you started your marriage. In your early twenty's. Most of this stuff is marital and and there are exceptions but we sort that out we sorted out in mediation and I want to emphasize I am. Not an attorney and I'm not a financial planner and I'm not a therapist either I'm a very very well informed. Divorce mediator but my eight pounds. Profession provides information we don't give advice so I never telling folks. What to do I'm explaining what he implications of there's a thinking it. And you've seen so many clients oh I have over seventeen years I've seen over. 2000 clients. You know you have a good feel of OK if you do this chances are and this is gonna break just making sure they're well informed about their options. And one of the options that you know you make sure there well informed about it is. You know how much money they need to live by an independent meet one of the ya homework that people do in mediation is a budget. He got to figure out what both. People need to live on so there are no surprises in the future. You don't want somebody nine months later to say oh my cash what was I thinking I can't live on this and that's important because. Budgets I think context. For people to be feeling comfortable. Yet that either have a gap and they're gonna have to since shop. Or maybe there's a little margin then there's still a lot of cheap reason their future vacations in their future but. Budgets are one of the cornerstones. As well as collecting the asset and the debt information. So you collect all that data is the value of the house here's the value of my retirement. Here's the value of the bank accounts. Maybe some mutual funds. And then there's always that debt shy so here's the visa and the MasterCard in the discovery. Discover card he got to come in and understand what the balances are to those assets and debts. And then the budget helps understand how much money he might share between to a few. Is it tough sometimes to differentiate between his dead and her dad. Well anything that is considered marital. Is marital. So I everybody likes the 401K to be a marital asset oh that's terrific fit but not everybody likes of the debt to beat marital. And that is also Merrill had but most things are not shared exactly 5050. That's pretty much a myth. Really figuring out how to share assets and debts it's like a jigsaw puzzle you put the pieces together. You figure out what he's doing with the house the retirement. That is the debt figure into that. Out of the car loan balance is figure into that so you take all of those pieces of data I sort of consider them a jigsaw. Until he and you figure out what picture's gonna work best at the end. But rarely do things turn out precisely 5050. It's just am a bit of a Mitt and in fact New York State is an. With Opel state it's not required 5050 state. People have a lot of discretion about what they wanted to do in mediation. But there's also a lot of discretion even if they end up litigate so. It's. Something that. People work out because they want. To have a better future relationship nobody wants to feel taken advantage stuff. To choose mediation over litigation obviously. Our cost effective rate well certainly yes but how do you. How do you encourage your clients to put aside their emotions that's sometimes why it goes to litigation right because you're so spiteful that you just wanna. Take them for all he has are ticker for all she had well. Is there in in mediation music continuum of client everybody who comes into mediation effect there's no question yeah. But there's cooperating Santa all the way over to the other side of punishing. And act. So the punishing folks. Sometimes escalate feeling that they're going to be more. Taking care of four. Get a better outcome if they're working through an attorney who's really. Like a warrior helping you know promote fat person's point of few which can be danger and can be punishing. But not all attorneys are warriors I mean there is very very wonderful attorneys who actually provides support and help. To clients and who may be up against something that is. Non literally irrational. Oro little. As I say punishing. Where you're just not thinking straight but I would say 85% of the forcing couples can certainly do mediation. And just some need to have PM opportunity to speak to an attorney all along the way of mediation. And when you finally create the agreement. There are almost always reviewed by attorneys to make sure they feared fair and equitable to that person. So at that point the attorney might be keeping some information to the client who's gone through mediation. I'll save that then the majority majority of mediated agreements don't blow up when they go to attorneys whose mediators myself for sure make sure that clients are well informed so there's no surprises. But. It is cost effective. It's efficient it's usually he had completed. In three years four months at the most end clients or pain a mediator just. One hourly rate. Together. Generally in a shared way. As opposed to two attorneys paint our Alina great but there's a place for attorneys in the divorce process no question about it and there is. Really terrific resources that I rely on for my clients to use. What is the last piece of advice you can give somebody listening right now Netflix yeah this is this is what I'm about to embark on. How can I protect myself financially. Well. Protection is about being well informed. And making sure that you really to have your homework done so that you're looking at these does that make sense. So again you wanna look at your assets in your debt you wanted to or could buy cheap menu wanted to bring common sense to get. Both mom and dad. Create a comfortable. And wonderful environments for your children. He went to learn more you can reach out to be JB gained mediation services dot com or pick up her buck a better that bitter divorce. That's fair and affordable way to ending your marriage Vijay thank you for your welcome back I was elated to be here. My hope is that. Today's podcast was a huge waste of time for you think you will never have to use. The advice of a divorce mediator. But they appeared going through and now it's here living it hopefully you were able to pull away some financial maggots. Harry now we leave you with my dad growing up he always had to. Financial words of wisdom they were gonna pass them along TO. It's Father Knows Best my dad two sets have a great weekend dominate your financings. Never underestimate. The power of small savings. If you pay attention for the small amounts to spend every day. We can make a big difference in the future. Over time it ends up. But more importantly. It teaches you financial discipline and making you more aware of where your money is going. Since.