Divorce Series Part 4: Start 3 Months BEFORE You Start the Divorce Process

By Carrie Rattle

Founder, Behavioral Cents

If you decide to initiate the divorce process, take the time to research all your finances thoroughly. Once your intent to divorce is verbalized, the emotional roller coaster begins. Hopefully it doesn’t include the hiding of assets or deceitful misrepresentation. 

Even if you don’t understand what you’re looking at, finding information can be very helpful for you.  Your lawyer and Certified Divorce Financial Analyst will know what to do with it all.

See a basic divorce preparation checklist below:

  • 3 Years Tax of Returns. They show income from assets that exist, capital gains/losses on assets sold, brokerage fees deducted on portfolios, taxes paid on properties, and many items like that in addition to income.

  • Track Spending for 3 Months. It is super important to understand what your expenses are, and therefore what you need to live on when it comes to paying or receiving alimony and child support.  If you can track your expenses for 3 months, this will give you a strong predictable yearly cash flow. Try Mint.com too, where you can automatically import all of your transactions from bank accounts and credit cards. Keep children’s expenses separate.

  • Collect Financial Statements. Insurance statements, bank statements, investment statements, retirement plans for the household – which means both parties.

  • Collect Debt Statements. Mortgages, car loans, student loans, lines of credit, credit card statements – for both parties

  • Find Your Employer Benefit Packages. You receive them when you start a job and they are updated every year. Some benefits such as stock options come in letters yearly.

  • Know where to find pay stubs. They show all the deductions made.

  • Print Social Security and Pension statements. They help answer what will you have for retirement.

  • Collect Credit Reports and Scores. You can get 1 free report a year from each of TransUnionExperian, and Equifax.

  • List Other Assets. Such as frequent flyer miles

Just Start by Opening the Mail

If you are not financially inclined, after reading this list you may prefer a root canal or hiding under the bed.  I get it.  This information is so important to ensure nothing is missed when you divide your assets.  Once a couple starts talking about divorce feelings of paranoia, fear, anger, sadness and many other emotions set in.  Bad behavior such as trying to hide assets or long-term bonuses may occur; or stress simply stops you both from thinking clearly.  Whether you have worked in the home or outside of the home, you deserve your share as an integral part of the marriage. The more information available, the more likely that will happen.

So just start by creating a file. Open the mail. Go online and print off statements. Divorce document preparation is easy once you start. Every time you do, you’re taking care of yourself. It’s amazing how much you can collect once you begin.

Your Personal Money Coach & CDFA©,

Carrie Rattle


About the Author

carrie-rattle.jpg

Carrie Rattle

carrierattle@behavioralcents.com
Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents

Carrie Rattle is a Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents. She is a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. By building a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live their own dreams. Behavioral Cents delivers a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation.


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Divorce Series Part 3: The 3 Biggest Financial Mistakes You Can Make

By Carrie Rattle

Founder, Behavioral Cents

The list of potential financial mistakes made while divorcing can be extensive. It is an exhausting, emotional time for everyone. Every money decision is emotional to begin with, and this stress just adds to the mix.  Divorce and finances can become complicated and dividing assets can be complex, which is why the finance industry CDFA © designation exists. Long ago, lawyers used to divide assets on a spreadsheet. But as finances grow in complexity, it is important to talk with your accountant on how to prepare for divorce financially and to have a CDFA do the work for you.

Here are 3 of the most common traps people fall into:

1. Fighting to Keep the Home

Home is a heartwarming word. Home is where memories are made, and where we feel safe and secure. It is natural to want to stay. The first question you need to ask yourself is ,”Can I afford to stay in this home?” Note that if you refinance under your name only, you will own all the debt.

Is your credit score strong enough to qualify for a mortgage by yourself? What will the monthly payment be? What are all the other household expenses you will have like property taxes, utilities, repairs, condo fees, etc.

It will all be on you now. Even if you are receiving alimony, it may not be enough.

If the home needs to be sold, it is often better to consider doing it while you are still together. Then each of you can qualify for capital gains of $250,000, reducing taxes owed on the difference between purchase and sale price. 

2. Dividing Assets Based on Equal Value

A $500,000 house is not equal to a $500,000 IRA. For example:

  • The costs of maintaining a home are much greater than maintaining an IRA.

  • An IRA when distributed will be taxed as income, whereas a home will be taxed at a capital gains rate which often may be less. 

  • Homes typically grow in value at a lower rate than an IRA invested in the market.

When you divide your assets, it’s important to consider your current and future income brackets, taxes on the assets, ongoing costs, and lifestyle needs.

3. Not Renaming Assets before the Divorce is Final

If you are receiving assets such as a home, investments, retirement funds, a pension – it is super important to ensure your name is on these items before your divorce is final. For pensions, it is very important to ensure a QDRO (Qualified Domestic Relations Order) is accurate and filed. If not, your rights to a portion of your spouse’s pension may not be in place. This could mean a significant loss of income in later years.

A friend left her name on a line of credit with her ex-husband. He purchased a $25,000 engagement ring for his fiancé using that line of credit. If he were hit by a bus tomorrow, my friend would be paying for the ring.  How unfortunate is that?

If you are splitting debt, make sure your name is off the debt going to your spouse, otherwise you could be held accountable to pay it.  It will also affect your credit score if your name is on the debt and your spouse does not pay it off responsibly.

Your Personal Money Coach & CDFA©,

Carrie Rattle


About the Author

carrie-rattle.jpg

Carrie Rattle

carrierattle@behavioralcents.com
Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents

Carrie Rattle is a Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents. She is a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. By building a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live their own dreams. Behavioral Cents delivers a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation.


Want to read more by Carrie Rattle?

Divorce Series Part 2: How Can a Certified Divorce Financial Analyst Help You?

By Carrie Rattle

Founder, Behavioral Cents

A Certified Divorce Financial Analyst (CDFA©) is an industry designated financial expert on helping divorcing couples understand how the financial decisions they make could impact their future.

A CDFA is part of the divorce team. Think of the lawyer as the strategist – they are experts on the law and hired to represent your overall interest when it comes to child custody and financial matters.  The CDFA supports the lawyer by helping you understand where you spend your money today, how it will change when you separate, and how it could further change in the future.

We:

  • Work with you to collect all your financial data to paint a clear picture

  • Work with you to develop a spending plan so that you are crystal clear on where your money is going now, how much you need for child support and living expenses, and what expenses will be duplicated in 2 households

  • Assist you in visualizing your desired financial lifestyle post-divorce

  • Analyze different financial tax scenarios for dividing assets and debts to assist in negotiations

Sounds complex? Yep, that’s why we exist. Divorce is stressful enough without managing all the financial considerations too.

Why Use a CDFA ©?

Financial scenarios need to be calculated for a divorce.  Lawyers are typically the most expensive resource in a divorce, so it makes sense to hire a CDFA to complete the financial work rather than a lawyer. Finances are also becoming exceedingly complex as different forms of stock compensations are given to employees, and when the alimony tax laws change, which just occurred in the IRS 2018 tax revisions.

Most clients who hire a CDFA © have a household income of at least $100,000 and their total assets exceed $100,000. CDFA’s often will act as an unbiased support for both sides but may be hired by one side of the divorcing couple to represent them exclusively.

If you’ve never had time to understand were your cash is going, or read all of your financial statements, trying to learn this while in the middle of a divorce is incredibly stressful. CDFA’s are an objective party who help you understand and think clearly.

Where do You Find CDFA’s?

CDFA’s are registered on the IDFA web site (Institute for Divorce Financial Analysts).  By going to this site, you are ensured the individuals are qualified. If you’re thinking about divorce, I’d be happy to assist. 

Your Personal Money Coach & CDFA©,

Carrie Rattle


About the Author

carrie-rattle.jpg

Carrie Rattle

carrierattle@behavioralcents.com
Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents

Carrie Rattle is a Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents. She is a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. By building a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live their own dreams. Behavioral Cents delivers a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation.


Want to read more by Carrie Rattle?

Divorce Series Part 1: Choosing the Style that Fits You

By Carrie Rattle

Founder, Behavioral Cents

In order to be the best Money Coach possible to my clients, a well-rounded understanding of all milestones you might face is crucial. I’m pleased to say I’m now a Certified Divorce Financial Analyst and I am going to share some of the basics to help you start on the right foot if you are wondering how to divorce.

Divorce is devastating. Despite the fact that only 5% of divorces are litigated (IDFA), emotions can run high. And the fear of living on less than the combined household income has its own set of challenges. Money decisions are emotional on a good day, but during a divorce emotions are on red alert. For example,

  • We are easily triggered when someone pushes our emotional buttons;

  • Sleep deprivation and emotional fatigue erode common sense;

  • We are tempted to act out anger, revenge, or seek comfort through spending money;

  • For some, there is significant pressure to learn our finances for the first time so we can make wise decisions when it comes to the division of assets.

The Different Types of Divorce

Divorce options reflect monetary, relationship, and time considerations.

Mediation:

A trained, independent 3rd party works with you as a couple to negotiate an amicable divorce. The mediator does not give advice (legal or non-legal). Each party retains your own legal counsel; however, you do not necessarily need to have your lawyers attend the mediation discussions. Agreements can be referred to lawyers for review and assessment at the end, which reduces legal costs. Mediators are typically therapists, attorneys, financial advisors or social workers.

Collaborative Divorce:

This is a team approach to divorce. Your family obtains professional help from experts in the legal, financial and mental health fields depending on your needs. Sometimes medical and child experts are involved. Each team member brings their expertise to the table and combines it with recommendations from the other members. The lawyers representing each party will have gone through special training. All parties are committed to find a “win-win” and cannot go to court or threaten to do so. This is a valuable alternative when one side needs advocacy – they may be mentally ill, or particularly unaware of financial matters.

Litigation:

This is typically the most antagonistic, expensive, drawn out means of divorce. Substantial assets may be consumed just in the divorce process alone. 5% of divorces are litigated.

Arbitration:

If as a couple you cannot negotiate terms acceptable to both sides you can choose to work with an arbiter. You and your spouse would each present your own argument without lawyers and the arbiter will have the final decision.

I’ve introduced the different types of divorce here, so stayed tuned next for my blog on how a Certified Divorce Financial Analyst can help you by reducing costs and dividing assets.

Your Personal Money Coach & CDFA©,

Carrie


About the Author

carrie-rattle.jpg

Carrie Rattle

carrierattle@behavioralcents.com
Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents

Carrie Rattle is a Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents. She is a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. By building a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live their own dreams. Behavioral Cents delivers a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation.


Want to read more by Carrie Rattle?