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Divorce Strategies Group

Denise French

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Divorce Financial Planning – Top 3 Strategies

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Divorce can really mess with your mind. I know because I’ve been there. It is like my brain was removed from my head and placed beside me for about a year. (It does come back!) The intelligent together woman that I once was turned into an emotional, brain-fogged, unorganized basket case. I tried very hard to keep it together, but I was not at my best. I felt paralyzed and incapable of coherent thought when I very much just wanted to focus and plan for my future with my young child. Divorce financial planning in Texas would have been the solution.

What’s a person to do? First things first.

1. Know the Basic Finances of the Home

What’s your role when it comes to the family finances? Do you handle the bill paying? Are you “in the loop” on all your bank accounts or are you in the dark? What about investment accounts or retirement plans? Do you have any? If you’re in the dark, you need someone to help you turn the lights on – and FAST! This is where a Certified Divorce Financial Analyst or CDFA® practitioner can really help.

Has your spouse blocked you from your financial life?  If so, a CDFA® may help you shed light on the situation.  A good CDFA® can walk through your taxes and identify brokerage and bank accounts.  He or she can also walk through any financial statements you have and help you identify where assets may be hidden.  A Master Analyst in Financial Forensics or MAFF® a different type of professional who can help you forensically trace bank accounts or brokerage accounts to look for hidden assets.  There is help available – you do not have to stay in the dark.  One client brought in a box of papers from years of stuffing them in drawers and closets.  We found 3 rent houses and $100,000 in CD money!

If you and your spouse are cooperative, ask for statements on all your asset accounts and your most recent tax returns so you can find a CDFA® practitioner to help you out with divorce financial planning in Texas and bring you up to speed. A CDFA® professional is specially trained in the financial aspects of divorce and will be your best friend in this process!

post-divorce in Texas

2. Think About Your Future

This part will be hard but start thinking about what the next phase of your life looks like. Unfortunately, this has to happen at the same time that you are grieving what you THOUGHT the next phase was going to look like. But if you allow yourself some space, it can actually be healing and fun. You now have the chance to start over again.

What did you used to dream of doing that got lost while you were married? Is it time to go back to school? Maybe a cool downtown loft condo should replace that huge family home that you had to keep clean. Whatever you dream of, you will need your budget and financial picture top of mind. That way, if your dreams outsize your wallet, you know you have some serious planning to do!

3. Build A Single Identity for Yourself

Often through marriage all the credit cards, mortgages, loans, etc. are in the names of both spouses. All of those accounts will have to be closed or converted. Immediately open a checking and savings account in your own name to begin the process of establishing your own financial identity. Be sure to put some things in place while you’re still married because after the marriage is over, your credit picture may not be nearly as strong. Next, find a good rewards credit card to apply for in your name alone so that you will be assured of having access to credit after the divorce and maybe even during if legal fees are necessary.

These steps may seem small but they are valuable first steps to get you thinking financially and looking out for your future. You can get through this, and a little divorce financial planning in Texas help from a CDFA® friend is a great place to start.

Common Ways to Hide Assets in Divorce

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Have you ever wondered if the opposing party in a divorce case has actually disclosed all the assets of an estate?  Do you feel like your spouse might hide assets in divorce?  

Common Ways to Hide Assets in Divorce

This article covers creative ways people have hidden assets in divorce and conversely, ways we have found those assets.  We feel like the best way to talk through a divorce is with integrity and dignity without lying about assets.  Often, doing so could backfire on you.  However, if you feel your spouse is lying about money, here are a few places to look.

Excess ATM Cash Withdrawals

Excess cash withdrawals from ATM’s are fairly common.  One spouse will start taking small withdrawals on a regular basis from ATM machines.  Instead of using the cash for legitimate purposes, they stockpile it and forget to mention this as an asset when walking through the estate valuation.  They claim they have spent all the money and have no cash on hand when in reality they have a lot of cash on hand.   We often are able to track exactly how much cash was spent, on average, in normal conditions and then compare that to the months leading up to the divorce and in the divorce months.

Stealing Hard Assets

Some people will literally “hide” assets.   For example, imagine if a couple has a lot of jewelry that’s been accumulated over the years from various sources. Prior to inventorying, one party takes a few select items from the jewelry box and hopes the other party doesn’t notice anything is missing.

This can also be in the form of hiding items in safety deposit boxes whether they be straight issue bonds in coupon form, stocks in issue form.

hide assets in divorce

Another form of stealing cash is having cosmetic surgery or taking an expensive lavish trip soon before requesting the divorce.

Overpaying Debt Instruments & the IRS

One way to having a cushy safety net is by overpaying the IRS.  An unethical spouse can change their W2 withholdings if you are employed by a firm.  Doing this creates an account you know will be refunded when you do your taxes the next year and it lowers your spendable income today for purposes of child support and negotiation.   If you are self-employed your ability to overpay the IRS can be in the form of quarterly payments from company distributions or again, increasing your W2 withholdings if you pay yourself.

If a credit card is overpaid and the credit balance sits for a while, the credit card company will refund the overpayment, usually in the form of a check. The party that overpaid the credit card can then take that check and cash it. To the other party, particularly those who aren’t close to the household finances, it just looks like credit card debt was paid.

hide asset in divorce

Self-Employed Financial Games

Self-employed parties have many ways to attempt to hide income and assets in their business. Income can be hidden by increasing expenses or by paying a large expense that must be done but wasn’t budgeting for a few more years. For example, buying a huge piece of equipment you had originally planned to buy in a few years will lower your income which could lower the value of your business.

Self-employed people can overpay taxes with increases to their W2’s or increase their quarterly payments to the IRS.  Self-employed people can also delay being paid and sit on a large amount of account receivable until after the divorce.

In Texas and many other states, personal goodwill is not a community asset. Games can be played here to try to increase personal interest and personal involvement in business as to decrease the value of the business in the community estate.

If you are considering divorce, it’s important that you have the right professionals involved. A Master Analyst in Financial Forensics ® (MAFF®) and a Certified Divorce Financial Analyst® (CDFA®) has the training to help uncover shady acts like the ones listed above. And here at Divorce Strategies Group, we have both the hearts and minds to help make sure your financial outcomes in divorce leave you feeling confident. It’s all about having the right people on your team. If you are concerned your partner will hide assets in divorce or need some professional divorce help contact us today.

Resources for your Divorce

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The emotions of divorce are vast and wide – but not unique.  Nearly everyone who has ever asked for or been asked for a divorce feels similar feelings.   Lost. Scared. Lonely. Shaken. Sad. Angry. Bitter. Relieved. Hopeful. Excited. Angry. In shock.   These are just some of the stops along the emotional roller coaster that is divorce. It’s not anything that anyone should have to endure alone. Divorce has become so commonplace that there are tons of resources available to help you survive the process with dignity.

There are also resources for divorce that are NOT a good idea.  When your FRIENDS AND FAMILY find out you are getting a divorce they are going to be full of ideas, tips, tools and stories.  They are well meaning, kind people who are trying to help you but mostly, they are not helping!!!  They are stirring up fear, bad ideas and likely hurting your case, usually without realizing it.   Rely on friends for a shoulder to cry on and a good ear to listen, but not for advice.  Do your best to get advice from objective professionals and NOT biased family and friends.

The resources that I think EVERYONE needs during the process and for a time period after are:

  1. A Good Therapist– Divorce stirs up so much emotional trauma, everyone involved needs an outlet for that trauma. A great therapist is the perfect person to channel those emotions.  Not only that, the therapist will help you uncover why you picked the person you didn’t love or why you picked the person who treated you so poorly – so you are not doomed to repeat the same behavior.A therapist is also the place to take your anger, fear, bitterness and other emotions – NOT your attorney.  The attorney is getting paid $350 an hour not to hear how hurt you are, but to help you with your legal case.Also, Divorce Care is a great tool and a way to connect to others facing divorce and struggling emotionally. Divorce Care is offered nation-wide at many local churches along with Divorce Care 4Kids.
  2. Certified Financial Divorce Analyst or CDFA™ – One of the most common fears in divorce is “Will I be ok financially?” It’s almost unavoidable. Before you agree to any settlement, you really need a second set of eyes and some financial projections, so you know what your post-divorce lifestyle will be. Divorce is tough and during it we tend to focus a lot on the right now. Hiring the right person for financial guidance will assure you comfort and security for the future.A CDFA can also use their knowledge of divorce tax laws and taxation of different financial accounts to help clients walk away with more after-tax money than a straight 50/50 split might offer.Be sure to hire someone with financial knowledge of divorce matters. Often, I see current financial planners write up settlement options prior to divorce negotiations are underway that set expectations too high and it causes a lot of problems in divorce proceedings.  It causes issues when you are expecting to receive 70% because he cheated, only to find out you cannot get 70% because of an affair.  Having to come down from that expectation along with dealing with divorce is hard, harder than it needs to be.
  3. The Internet– Divorce has become big business. New resource sites pop up every day offering a wealth of free information, downloads, blogs, referrals, directories, etc. It can be somewhat overwhelming so just pick out what you connect with and leave the rest. Go slow. Be kind to yourself. Going to a few is a good idea but don’t let yourself sink in too long.

This is going to be a challenging time in your life. Ultimately, you will be stronger, happier, and ok – as long as you choose to. Use the resources for divorce available to you to make good decisions for yourself. Today truly is the first day of the rest of your life.