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But once money and especially children are involved, it obviously gets much more complicated. >> Right. Right. Right. Peter, hello. Good to see you and welcome back everyone. We have an important and tough topic today. Getting divorced may cost you how to prepare financially. Getting divorced, it is not easy, not emotionally, not financially, and the cost is often much deeper than expected. So, preparation is key. Let’s talk through three expenses that may be known, maybe not well known. Number one,
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I’m sure this is on most people’s radar, legal fees, right? The amount can vary what you’ll spend, but according to Forbes, the average divorce costs between 15 and 20K. Contested divorces can exceed 100K. So, how do you prepare Peter for this huge variable? >> And of course, you’re talking about just the legal fees cuz I’ve always heard the cost was half. Um but, yeah, so the legal fees can be extensive and the the amount of preparation, I don’t know how how far in advance you ever want to
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prepare for a divorce, right? And until you do, until you have to. Um but, the amount of preparation also goes into how intimately involved you are in the household finances. Because if somebody is completely in the dark about the household finances, then they may end up having a more costly proceedings from the legal fees perspective in the divorce and may not walk away with as much. So, there are benefits to being involved in your household finances, whether you are a cohesive team and remaining happily
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married forever and ever and ever, which I would say is also helped by being counterparts in the finances, or if you are unfortunately splitting that partnership, it again pays to be knowledgeable of the home economics and the household finances. Uh because those legal fees can be increased and your walk away can be decreased if you are not. >> Right. And I’m sure that that number can absolutely skyrocket for high net worth couples who have more assets or maybe even share businesses together.
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>> Sure. Yeah, if you’re talking about having business valuations and having to A marriage is a financial arrangement as much as it is one of the the heart and and love, it is a a financial coupling. It’s a partnership. And and and if there are businesses involved, especially if there are additional outside partnerships that have to be reconciled and split in order for this partnership to be dissolved, then absolutely, yeah, it can be very expensive. I mean, retirement accounts need to be split.
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That’s usually through a court order called a qualified domestic relations order for how tax deferred and and retirement accounts can be split and divided. And sometimes we’re looking at at a house and the assets and the the equity that is in a home versus a retirement account. And and doing the math on how those stack up, is it even if we’ve got after-tax equity versus not yet taxed retirement accounts. But then you get into high net worth again with like business valuations, um cars,
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vacation homes, artwork, things like that. Like it can it can be much more expensive. Yeah, it it it is more involved basically the more you have. If there’s nothing there to split, everybody is pretty much, well, I’m not happy, you’re not happy, wipe your hands and and walk away. A little easier, but once money and especially children are involved, it obviously gets much more complicated. >> Right. Right. Right. The next surprise expense we have, cost of living. Understanding your finances
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before and immediately after divorce is really important. Cutting back on discretionary funding, obviously spending, excuse me, that’s important, but there’s also a bigger issue. Divorce often means moving from one household to two, which can increase your expenses. >> Well, and I’m saying this backwards, I believe, but the division of the parts is greater than the sum. Uh meaning that when two households divide, one household divides into two, and now we have two different sets of living
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expenses. It is more than what the living expenses were in a uh unified household. And and that might seem like it’s a no-brainer. Yes, of course, but I don’t think that it is thought through nearly as much. And where I find this too often be true, painfully, is when one spouse is attempting to maintain the same household that they used to cohabitate, maybe for the good of the kids. I want to give them the same quality of life. I don’t want to force the kids to move. And so, I’m going to stay in the same
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household. Oftentimes, even with alimony and child support coming in and being part of the financial picture in that household, we find that unfortunately living expenses to maintain that that old house that everybody was used to and accustomed to with one spouse being removed is not as easy as people would hope. And so, sometimes it makes more sense just to back up to ground level and start from where you are rather than where you were before the divorce. Can be It can be more immediately financially and and
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lifestyle painful, but long-term, I think it is a better building place to start from where you are now rather than where you were and easier to manage the finances. >> Mhm. And then last we want to talk through professional development and this is actually a little bit more geared toward women who are watching and listening because divorce affects women financially in a greater way than it does men. In fact, according to Investopedia, women’s income can drop by 20% often prompting a return to work or a
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need to update skills. So, what should somebody be thinking about if they need to increase their earning power or you know, change what they’re doing when it comes to working after a divorce? >> Well, and and there are house husbands out there these days, right? So, this could more I think these days kind of go either way. I don’t know what time period the stats we’re going over, but like let let let just say on on on on average more more often than not still these days women, but but regardless if
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if anybody after a divorce is talking about or considering or or being forced into a return to work, right? Then then that might just kind of be to be expected that we’re going to have to update our resumes, get back into the job training, um fine-tune our skills and as a result of that that there is going to be a change in income. If we were not in the workforce and now we are being forced to return to the workforce, that is in some capacity just ref you know, in inferred there that it is not by choice. And so, the
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financial situation probably dictates and mandates that that is part of the solution there. But I think even when there were two income earners in a household, both households still feel the pain financially. There is a reduction on both sides, probably more for for women than than men unfortunately, but there is a reduction in total amount of income there. And and even if there’s not, there’s still a job that that other spouse was doing that is not now accounted for. So maybe the expenses go
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up. Um but we need to think through all of this and and Aaron, we were sort of joking before, maybe counseling justice cheaper. Right? Uh might might be a better solution there. Uh if if at all manageable. And you know, all jokes aside, sometimes it’s not and divorce ultimately is is our our recourse. Not not a first choice, obviously. We’re we’re we’re pushed toward it. Um but it is something that we have to do and when that time comes, we just need to be aware of the impact to the financial
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arrangement and the division of that partnership as much as we are the divorce itself. >> Right. And Peter, in in your experience having done this and and my experience, I mean, you and I are both very thankfully happily married, but I have found that people who are working with a financial advisor and going through divorce are able to focus more on the emotional component, which is so very important [clears throat] when you are going through something like this. And just kind of almost having an advocate in
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your corner who can hold your hand through the financial part can be a load off. >> I think that there are certain life events where very shortly after them, the conversations turn to money. Uh death, divorce, birth, college, right? There are just certain life events where all of a sudden we’re now hyper-focused on the finances and I think that especially in those times of those life events, it is so reassuring to the people that that I think I deal with that they have somebody to come and
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talk to. And I think that I’ve seen that not just with our clients obviously, but for everyone. If they’ve got somebody that they can talk through those issues and can provide some guidance and insight and reassurance, then we can focus on the issue at hand more than I’m forced to deal with the money at the worst possible time. It is is I think a benefit during those times. So, yeah, absolutely Aaron. I I definitely see that to be true. And it’s Unfortunately, I I have dealt with with
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clients and I’ve seen clients who have not had that resource ahead of time and then suddenly a divorce is happening and they’re seeking out that guidance. I’ve seen client families that have have had those events happen and and and been there as that one of the first calls I think often when those events do happen. So, having having somebody on your side who can help you work through the finances definitely a benefit. Yes. >> Right. Right. So, that being said, Peter, for somebody who would like to
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sit down and talk with you about this, no matter where they are in their relationship or their journey, and so they are prepared no matter what, what’s the best way to reach you? >> Yeah, well, I I I love to be see people making progress whatever path that’s on. Sometimes that progress needs to be independent. Sometimes that’s as a couple. Sometimes it started by yourself regardless. So, wherever you’re at in your progress and and you want to continue making that, you need to have a
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plan. And that’s what we put together for our clients. We call it the Optimize Retirement Plan. There’s no cost to get that put uh to get that put together. We will do that for you as a courtesy service. So, just start the conversation by giving us a call 919-300-5886. 919-300-5886. You can also text your name to that number, by the way. You can text us at 919-300-5886 or go online richonplanning.com. It looks like richonplanning.com. Uh look us up online. We got uh lots of great reviews out there from from
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clients or folks who had questions and we helped them answer them. >> Okay. Peter, thank you very much for your time today. >> Thank you, Erin. Hey folks, Peter Rashaan here with Rashaan Planning. So glad that you are enjoying the podcast, Planning Matters Radio. You know, one of [music] the tools that we’ve put out there that people really seem to appreciate and really are are finding of value is at 919retired.com. It is your retirement [music] tax bill calculator. If you’ve got any kind of
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retirement account, your tax-deferred 401k or IRA, this is the website, this is the resource where you can go, you can plug in your own numbers, your information, you can slide the the the tool calculator up and down for your tax rate or [music] your amount of savings and see what your tax bill is likely to be if you default and defer to the IRS’s plan versus what you could potentially bring that tax bill down to. A lot of times, it is a very significant savings. So, if you have not yet, go to the
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website 919retired.com, run your numbers on the retirement tax bill calculator. >> This has been Planning Matters Radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged [music] to seek investment, tax, or legal advice from an independent professional advisor. Any investments and/or investment strategies mentioned involve risk, including [music] the possible loss of principal. Advisory services
00:13:13
offered through Brookstone Capital Management, a registered investment advisor. Fiduciary duty extends solely to investment [music] advisory advice and does not extend to other activities such as insurance or broker-dealer services. Advisory clients are charged a quarterly fee for assets under management, while insurance products pay a commission, which may result in a conflict of interest regarding compensation.
