Coinbase (COIN) went public recently and had the attention of the investment world. Coinbase is a financial technology company that focuses on offering its retail users the ability to buy, sell, and own crypto and digital assets like Bitcoin, Ethereum, Litecoin, Doge Coin, and other currencies on the block chain. Coinbase reported they have more than 50 million retail users.
The popularity of cryptocurrencies has skyrocketed over the last decade. You can’t watch Bloomberg or CNBC or any other financial news outlet without crypto being discussed. Significant wealth has been created for individuals owning crypto assets as well. On April 16th, 2020 Bitcoin was $7,354. On April 15th, 2021 Bitcoin was $63,214.
Some experts believe we are in the very beginning of a long bull market with crypto currencies and at some point the “crypto standard” will replace our current “gold standard”. Financial advisors are struggling with how to offer these assets to their clients as a liquid, compliance approved vehicle is not readily available from a trusted source. This is all rapidly changing. Some experts estimate by the end of 2021 crypto currencies will become common place in portfolios as large financial institutions begin offering them.
Determining the Value of Cryptocurrency
Naturally, as a Divorce Financial Advisor, I began thinking how these types of assets were going to impact divorce settlements. In addition to Coinbase, investors can buy cryptocurrencies through companies like PayPal, Cash App, Robinhood, and Blockify. These relatively new types of investment vehicles should be examined very carefully by client’s getting divorced, attorney’s negotiating a settlement, and financial experts working for clients. In addition, sometimes divorces take 6 or 9 months or even a year to finalize. With any asset as volatile as Bitcoin, you will want to make sure the marital balance sheet is updated before any financial agreement is reached. Imagine the change in value of a Bitcoin holding from my example above. If Joe and Sally are getting a divorce and filed 4/16/2020 and he owned 3 Bitcoin valued at $22,062. A year later, and now that same Bitcoin is worth $189,642.
Analyzing cryptocurrency holdings in a marital estate is going to become more and more common moving forward. It will be crucial for the client, the attorney and the financial expert to work together to examine the potential impacts of taking the crypto asset versus giving it to their soon to be ex-spouse.
Determining the tax consequences will be a major issue as well. What is the tax impact if the crypto asset is sold? Were there any crypto assets sold in the year of the divorce? There could be a huge forgotten tax bill if you are not careful! Investors must report capital gains or losses from sales of cryptocurrencies on Form 8949 and Schedule D just like buying and selling property or stock. However, according to an article in the February issue of Financial Planning, titled Crypto Creates New Hurdles for Financial Advisors This Tax Season, many firms only send out the gross proceeds of the Crypto asset sales. It is the investors responsibility to figure out their own cost basis. This can create many hurdles when determining a marital estate. This information is crucial to determine the impact of how the crypto asset should be split.
If you are handling crypto assets in your divorce contact us to help you navigate these waters to avoid costly mistakes and tax issues down the road. Schedule your complimentary consultation today.
Thinking about divorce? If you are, kudos to you for being here and reading this article. Careful preplanning can save you time, money, and emotional turmoil.
This is already an emotional and stressful time. If you are like me and many of the people we guide through divorce, this also be a time when your thinking is the cloudiest. It is typical to have trouble understanding simple concepts or even wrapping your head around everyday problems. That is normal! Relax, take a deep breath, and know you can do this. We can help. Here are 5 simple things which can help you prepare financially for a divorce.
1. Have access to money – liquid cash or credit.
This is vital!! You deserve to have access to funds for your basic living needs as well as professional support throughout your divorce. This can mean a credit card in your name only, a separate bank account in your name, or even a stash of cash in a shoebox or safety deposit box.
Many couples function well working from joint accounts during their divorce, but we have also seen vindictive spouses empty joint accounts as soon as divorce is mentioned. You do not want to be left without access to funds to pay for divorce professionals or for basic living needs. Be smart and take the necessary precautions before you discuss divorce with your spouse.
We do NOT mean hide money – we are simply suggesting you have access to funds which cannot be taken from you by an angry spouse without your approval. You can open a credit card in YOUR NAME only while still using the marital income to qualify for a larger amount of credit. There is nothing wrong with doing this prior to filing for divorce. Be sure to do it before temporary orders are in place (aka when you file for divorce.) If you have already filed for divorce, check with your attorney on what you can, and cannot do, under the laws in your county.
2. Gather all the financial documents you can find.
Financial statements provide a road map to your estate. They are the building blocks to a marital inventory and proof of ownership or debt. I am referring to bank statements, retirement and investment account statements, mortgage statements, paystubs, tax returns, insurance policies, credit card statements, and anything else that seems important. Having copies of all this not only helps you stay informed about your financial situation but will save you money when you meet with a divorce professional and already have an organized file of your financial life.
Another reason to gather all the documents you can is to search for hidden assets. We have had many women come into our office over the years with a box (or boxes) of documents. One woman was told over and over by her husband they were “dead broke”. He would not even purchase new bed mattresses – he only bought them used. By going through old tax records, we found $100,000 plus in CD’s and two rent houses she did not know they owned!
Information is power – gather all of it that you can, prior to beginning your divorce.
3. Take some time to thank about what you want in your future.
It can be easy to get so wrapped up in the details of the present you forget about what is next. Do not make that mistake! Stop and take some time to think about your life after your divorce. In particular – the financial side. Where do you want to live? What are your expenses going to be like? I recommend you put together a budget outlining all your expected living expenses. This will give you some clarity about what you will need moving forward and can lessen some of the anxiety about the future.
It may also make sense to work with a divorce financial advisor prior to filing so you can have an idea of what life after divorce will look like.
4. Find a Divorce Financial Coach or Therapist.
This may not seem like it is a financial step, but it is. A professional on your team that will help you make sound decisions can make a big financial impact on your future. Emotions run high during the divorce process and as we said earlier, your thinking will be cloudy. A divorce coach can help you work through those emotions to free your mind up for the business of divorce so you can objectively focus on the financial outcome. A therapist can help you unbundle why you are in fear or why you feel the way you do and help you overcome obstacles entangling you emotionally.
When I went through divorce I had an amazing therapist guiding me and helping me untangle the feelings I had. To be able to negotiate from a place of power, I had to get my emotions behind me and look at the situation like a business negotiation. I worked with that therapist for 2 years after the divorce to help me not pick the same type of person and I didn’t. I am now remarried for nearly 12 years as of this writing and with a wonderful man who is very good to me and my daughter from my prior marriage.
5. Finally, think about how you would like to divorce.
If you think it is going to be a battle for every asset and advantage, then adversarial litigation attorneys will be involved, and the cost will be $20,000 – $50,000 or more. If you envision a more amicable process, then perhaps mediation is in your future. It will allow the two of you to talk through the issues and agree between yourselves what works best, saving a lot of money in the process. In either case you may want a financial professional, like a Certified Divorce Financial Analyst®, to be part of your team. The CDFA® can help remove any confusion about your financial situation, present options for the division of your assets, and provide a picture of how a given settlement will impact your financial future today and in the future.
A divorce is probably the largest financial transaction most people will undertake during their lifetime so make sure you are fully informed. These 5 simple things will get you started on the right track and help make the difficult process of a divorce go more smoothly.
For a complimentary consultation please schedule with us online today or call us at 281-505-8177. Also, to understand your divorce options sign up for Divorce Options in Texas either online or in person in our Woodlands location or Houston location. More information can be found online at www.divorcestrategiesgroup.com.
Of all the worries and concerns to think about when going through a divorce, financial planning may not be at the top of your list. It is likely you are working, raising kids, and paying the bills. Many newly divorced women feel the demands never end. Creating a new financial plan is important because you have lost the extra income of your spouse. It is also especially important if your spouse managed your investments and longevity planning. Outsourcing your financial planning makes sense when you are short on time but still need to make sure you manage your money well as you age. We encourage women to consider financial planning for several reasons, but most of all for the woman’s wellbeing and peace of mind. Here are a few tips to get started.
Planning at the Beginning
Your financial life after divorce starts as soon as you sign legal paperwork agreeing to a settlement with your ex-spouse. You need to make sure you know what you are signing, because it will have a big impact on your financial future. We recommend meeting with a financial planner to review the settlement before you agree to it. Financial planners can find opportunities you might have missed such as tax breaks or being able to retire earlier than you expected. This process with allow you to understand all your options before you sign the settlement agreement.
Planning for Longevity
Women generally have a longer lifespan than men. Financial planning in divorce will create a consistent cashflow strategy and budget. You and the financial planner will create a list of priorities you will need money for such as helping to finance your children’s education.
Planning for Financial Confidence
Some women going through a divorce assume they will have to live like a miser because they have an internalized fear. Financial planning gives you freedom by replacing fear with confidence. Investing money is difficult to do when you’re paralyzed by fear, but not investing means you could outlive the money you have now.
Planning for Peace of Mind
As financial planners, the goal we have for all our clients is to give them financial peace of mind. You will know what bills you need to pay every month and how much of your disposable income you can spend. You can spend your money in freedom because you know you have a plan for your budget, taxes, and investing. We can also help you adjust your financial plan if you experience new significant life changes.
Another common assumption women sometimes have during a divorce is they automatically own an asset the court has awarded to them. We will walk you through the steps you need to take before you can claim an asset as your own.
At Divorce Strategies Group, our main services to you is financial planning to help ensure you do not run out of money in your lifetime and to help you to take ownership of assets awarded to you in the divorce. We love the work we do because it empowers women to be financially independent for the rest of their lives regardless of circumstances. If you are going through a divorce and are in need of financial planning, please contact Divorce Strategies Group and schedule a consultation today.
Whether you have a career or are a stay-at-home mom, debt complicates a divorce. Nobody wants to be responsible for paying a spouse’s debts, and you want to avoid having any joint obligations on your side. There is a way forward if you are aware of your options.
Keeping the Debt
You have a few credit cards that you share with your spouse. When you look into your spouses’ spending, you discover that they have used credit cards for all kinds of things you don’t: gambling, alcohol, and a few hotel visits that have nothing to do with business trips.
This naturally is frustrating, so you don’t want to take care of the bill. They’re the other spouse’s expenses and they should have to take care of it, but they are not. The bills don’t get paid and time is moving forward and because the credit cards are under your name, whose credit is getting ruined? Yours.
You want to take care of any joint debt like this, so your credit report is clean. You will be compensated for it in the settlement by getting more of the cash, house, 401K, investments, or asset. Until that happens, you must protect yourself and keep paying the credit cards.
If your spouse is spending thousands of dollars you did not approve, we call that a “waste claim.” These can be difficult to prove and you will need attorneys to help.
In one case, the husband had bought a BMW and an apartment for his girlfriend. We found proof of that spending through receipts that amounted to tens of thousands of dollars. Our waste claim proved that he was stealing from the estate and he had to compensate the estate. With the help of a financial professional and the lawyer, he paid that claim on the estate spreadsheet and the wife was given more in assets as a result.
Digging for Information
If you know your spouse has spent a lot of money, but you do not know exactly how much or where there are ways to find this data. For our clients, we do a lot of digging, starting with the accounts we know about and looking for fishy transactions, such as massage parlors, prostitutes, or rent in New York when you don’t own property in New York. We look for anomalous patterns, flag them and ask for more information. We look at property records, tax records, and all kinds of paper. If the spouse isn’t forthcoming, your attorney can subpoena what we need.
Years ago we had a client with a special need’s child. The husband would not pay for future horseback riding for their child with Down’s Syndrome which had proved to be very helpful for the child in the past. He said they did not have any money. Through five-year-old tax records and pieces of paper that our client had been collecting for month, we discovered two rental homes, a girlfriend, and $200,000 in Certificates of Deposit.
If you think your spouse is stealing or hiding money, collect any kind of information, no matter how old or small, and bring it in for us to look at.
Want to know more about what to do? Please contact Divorce Strategies Group for a complimentary consultation. We’ll talk to you about next steps so you can receive the assets which are rightfully yours!
Many of the people I meet with tell me they are married to a narcissist. As cutting as this may seem, many people are divorcing someone with a personality disorder. One therapist we refer states many people who divorce have issues like narcissist personality disorder because the people who do not have this or other personality disorders are able to work through problems in the marriage and stay married. So, if you are married to someone you think is a narcissist, know you are not alone. Also know there is a way out of this with your sanity intact, it will just take a little extra effort.
What Is A Narcissist?
A diagnosis of Narcissistic Personality Disorder can only be given by a mental health professional. There are signs and symptoms you can identify and read about all over the internet. A general internet search will typically identify this as a disorder in which a person has an inflated sense of self-importance. Narcissistic personality disorder is found more commonly in men. Symptoms include an excessive need for admiration, disregard for others’ feelings, an inability to handle any criticism, and a sense of entitlement.
Although understanding and recognizing the characteristics involved is helpful, this knowledge will not give you the help you need to divorce and save your sanity. It can be frustrating and emotionally draining.
It did not start out this way. They may have started out showing you how much they loved and cherished you. You believed it would always be that way. When did it change? Do you wonder if maybe they will change their mind and go back to loving and cherishing you like they used to? It is normal to hope for that, but it is likely keeping you frustrated and stuck. And, if you are reading this, it is probably not going to happen.
And Here’s Why . . .
If you are dealing with a narcissist, you have likely already tried everything! Not only does it get tiresome it can wear down your own self-esteem. It takes a massive amount of your time and energy with nothing in return! Bill Eddy, LCSW, Esq., creator of New Ways for Families and founder of The High Conflict Institute has 4 Tips on How to Deal with a Narcissist Without Getting Stuck and Disliking Yourself:
Do not call them a “narcissist!”
As tempting as this is, it absolutely backfires and makes things worse. Instead, they become obsessed with proving you are the one with the problem.
Do not argue with them.
You do not need to defend yourself because it is not about you. It is about them and their personality. They have no insight into their own behavior and see things in all or nothing terms. They see themselves as the victims and they feel it is your fault.
Set limits on what you will do.
You have probably spent years trying to figure out how to placate a narcissist, right? Bill Eddy has a saying he uses…”FORGETABOUTIT!” You are not going to change them so work on changing how you react to them.
Do get support and consultation.
Your self-esteem may be worn down from all the insults, criticism, embarrassment, and shame. Bill Eddy suggests getting help from professionals like a coach or therapist.
How to Move Forward
You will need a step-by-step course of action. You may have to cut ties and build some distance emotionally. The key takeaway is you will need support and guidance on how to successfully navigate this difficult time. You will not want to do this alone.
Please reach out for your complimentary initial consultation. We will give you the information and confidence to decide how to best move forward and have the life you deserve – a life of joy, love, and peace of mind. Contact us today!