During the third panel of our Get Divorce Savvy series, hosts Stacy Francis and Lisa Zeiderman were joined by an all-star lineup of professionals and individuals that have gone through divorce themselves, who shed light on some of the top challenges people go through before, during and after divorce, such as becoming financially literate, finding hidden assets, dealing with a divorcing spouse that struggles with addictions, and relaunching your career. Watch the full recording and read the key takeaways below.
1. Becoming Financially Literate for Divorce
As panelist Laurie Itkin explained, the first step anyone contemplating divorce needs to take is become financially literate. That is a great time to reach out to Certified Divorce Financial Analyst (CDFA) to help understand the marriage assets and debts, and how child and spousal support may be addressed.
During the divorce process, if you’re navigating mediation, working with a CDFA is crucial to help make and respond to proposals. And if you’re going the litigation route, while a CDFA does not replace a lawyer, they can do many of their functions for a more affordable price.
Even after divorce, a CDFA can advise divorced clients on a wide array of issues like mortgage refinancing, investment management, and making sure they don’t run out of money.
Laurie, a CDFA and wealth manager herself, shared her top tips for long term financial security:
- Invest in your career as an asset to produce income and be financially independent
- Work with CDFA to:
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- Set realistic expectations on the divorce arrangement and get information and education to make confident decisions.
- Create a financial plan for when the child or spousal support ends.
- Lay out your income sources and finances setup so you don’t outlive your money.
You can find a CDFA here or reach out to the Savvy Ladies helpline to get matched with one for free.
2. Addictions and Divorce
Nearly half of the more than 17,000 study participants with a history of alcoholism got a divorce at some point in their lives per a study in the Journal of Studies on Alcohol and Drugs, from the University of Michigan.
When divorcing a spouse that struggles with addictions like alcoholism or gambling, the divorce is filled with extra layers that have a financial impact. Working with a CDFA that can provide guidance is even more crucial in cases like this.
Another tool that can help when dealing with alcoholism is Soberlink, an alcohol monitoring device for child custody cases where one or both parents are accused of abusing alcohol. As explained by Chris Beck, VP of Family Law Business Development for Soberlink Healthcare, their FDA-cleared real-time remote alcohol monitoring system ultimately aims to preserve the relationship between parent and child. While the device does not replace treatment, it can be used to document sobriety. Other professionals Soberlink works with are treatment professionals and addiction experts.
Learn more about Soberlink here or listen to Chris on the panel recording at 15 minutes and 40 seconds.
3. Finding Hidden Assets in Divorce
According to a new white paper put out by Francis Financial, 63 percent of women the firm surveyed “felt strongly that their husband was hiding assets during the divorce process.” Hidden assets both during marriage and divorce is a widespread issue and one that many people going through a divorce tend to underestimate.
When assets are hidden, a forensic accountant like Gary B. Rosen, CPA, CFE, CFF, CVA, CGMA, can help find them.
What is dissipation of assets?
If you’re married to someone with an addiction issue, that person’s earning power may be compromised in the future. Women must build a path to become financially independent.
Dissipation of assets can occur in two ways:
- Spending the money: wasteful dissipation of assets via gambling, drinking, day trading, etc
- Reducing income: taking a job that isn’t as lucrative in anticipation of divorce. In some cases, a business suddenly doesn’t do well or a hedge fund gets closed prior to divorce. A forensic accountant can look into that and see what is actually going on.
How do you track dissipation of assets?
Places where to look for hidden assets are:
- Tax returns
- Bank records
- Credit card statements
- IRAs
- Phone records
One of the most powerful tools to find hidden assets is a subpoena. When the divorce lawyer’s discovery demands aren’t handed over, the lawyer can go to the financial institution directly with a subpoena. A subpoena can be issued to legally get documents the banks, credit card, houses, etc. that are withheld by a spouse. This gives the roadmap to follow the money. It also works for online services, like obtaining records from online bankings when you don’t have the passwords.
How to deal with the cash that disappears?
Gary suggests looking at cash extractions, and when lifestyle analysis is done (an analysis that documents all of the marital expenses) make sure to get credit for those transactions.
Liquid vs. illiquid assets
Dissipation of assets doesn’t always refer to liquid assets. In an example provided by Gary, the husband had taken out a Home Equity Line of Credit (HELOC) without the wife knowing, therefore taking assets from the value of the home (illiquid asset) to fund his lifestyle.
Offshore assets
Tax havens are locations that don’t have a tax treaty with the US. When money is in a bank account abroad, in a tax haven, it’s considered an offshore asset and it’s not taxable by the US. But tax heavens can be traced too. While you can’t always get to the bottom of it, there’s always two sides to a transaction, so looking at the other side of the transaction (where the money came out) is a good starting point.
What if the husband has not been filing taxes?
For most divorcing couples filing joint tax returns is best to save in taxes. However, you may want to file – Married filing separately if you are worried that your spouse is not disclosing all of their income or doing anything unsavory with their taxes.
Hidden Assets: Advocating for Yourself
Karen Sutton, a divorced mom, shared her divorce story and the way she was finding the pieces of the puzzle when trying to find assets hidden by her former spouse. Watch the panel recording at 30 minutes and 35 seconds to listen to her story. Here are her takeaways from her experience:
“My key advice to those contemplating divorce and looking for hidden assets is to do your homework. Start now. Look for anything financial which includes ATM receipts, credit card and bank statements, phone logs, contracts, real estate transactions, bills, etc… Go through the trash if necessary. Even the most innocuous receipt can lead to other assets (a purchase on a credit card you don’t recognize). Utilize all resources at your disposal including subpoenas, depositions and forensic accountants who can trace the money trail. Most transactions are digitized and with limited information they can be found both here and abroad. Most of all, be tenacious, creative and stay calm. Your financial future is at stake.”
4. Relaunching Your Career Post Divorce
After several years of being a full time mom at home, Lara Theriault needed to get back to work. She attached her resume and listed the types of jobs she was interested in and sent it to all her contacts, and ended up receiving an overwhelming response and ultimately helped her find a job. Today she is the Assistant Director Of Development at UVA McIntire School of Commerce.
Here’s her advice for the career relaunchers:
- Do not procrastinate. Do not wait until after the divorce is settled to prepare for your relaunch.
- Ask for help. Spread the word that you are returning to work and ask everyone to help you get informational interviews. Ask people to role play for interviews with you, review your resume and cover letter, and make an introduction for you.
In addition to networking, working with a coach can also be part of your career relaunch strategy. Melina Denebeim, founder of MFL Coaching helps individuals take their passion, put it into practice and achieve their goals. She helps women up their career to create more financial stability in two major steps:
- Self assessment process: tapping into who you are, discovering your core skills and translating the role you had at home into a workforce role. It’s about creating your personal brand, your identity.
- Tactical part: understanding how to conduct your job search, focusing on the right platforms, creating your Linkedin profile, learning networking etiquette.
Divorce is the blueprint for the next stage of your life. Even with all its hardships, it can be an opportunity to redefine your life and who you want to be moving forward. Building a personal support system and setting yourself with the right tools and professionals is a key part of that journey.
For more tools and expert advice on divorce, read the recap article for panel 1 here and for panel 2 here, and visit our brand new divorce glossary. Have a financial question? Submit it to our Free Financial Helpline and we’ll match you with one of our expert volunteers.
