Preparing for and Recovering Your Financial Health in Light of a Divorce

• How to organize financial documents

• Experts to contact as you begin preparing for a divorce

• The value of an emergency fund and how to build a safety net

• Understanding why valuing your assets is so important

• Creating a post-divorce financial plan to help manage expenses

• Updating financial goals and adjusting your budget

• How to begin rebuilding your credit and financial independence

• … and much more!

If you would like to speak with one of our attorneys, please call our office at (503) 227-0200, or visit our website at https://www.pacificcascadelegal.com.

To learn more about how Jamie can help you, you can visit his website to set up a consultation: https://calendly.com/woodsonwm

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Steve Altishin
Hi, everyone. I'm Steve Altishin, Director of Client partnerships here at Pacific Cascade Legal. And today, I'm here with President of Woodson Wealth Management and founder of Allegiant Divorce Solutions, Jamie Lima, to discuss how you can prepare for and restore your financial well being before, during or after a divorce. Hey, Jamie, how you doing today?

Jamie Lima
I'm well, thank you. Thanks for having me.

Steve Altishin
Well, thank you for being on. This is a great topic. By the way, this is the kind of stuff we really like. So before we started, can you just sort of tell us a little bit about yourself, and you know, how you got to be where you got to be?

Jamie Lima
Yeah, absolutely. And again, thanks for having me on. So I, I'll give you a little bit of a I'll give you a brief background on myself. So I'm originally from the East Coast, I've been born and raised in a little tiny little town in Rhode Island. But I now live in a tiny little town just outside of San Diego, California called Ramona California. And I started my career in the financial services industry, way back when, like 2005 2006 or so I worked for a company called Morgan Stanley. And I left there after about five or six years and went to a company called Fidelity Investments, which everybody knows and loves, and launched my own company, Woodson, Wealth Management about three years ago, now, three years ago, we're recording this June 20. year going live on June 20. July 1, will be our three year anniversary. So I'm very proud of that. And just more recently started focusing my time, energy and efforts on more than divorce, financial planning, I went through a pretty rough divorce myself in 2017. And on the product of a divorce from my parent, my parents were divorced when I was about seven or eight years old. So it's been something that's been kind of the story of my life for a very long time. And I'm just, I'm just, it's a passion of mine. And something that I really enjoy helping people navigate because it can be can be very, very challenging.

Steve Altishin
Oh my God, yes, you know, you're the perfect person to have I mean, I was good to start with, but I really have to, you know, we know that divorce can have a huge impact on a person both on their emotional and on their financial level. But you do say that the negative impact can be lessened by preparing for it and preparing for it early. You can talk about preparing for divorce, even before anyone has filed for divorce. So where where can slash should someone start thinking about preparing for that?

Jamie Lima
Well, I think what and I read, I read I was reading a statistic the other day that said something to the effect that it takes men on on average over a year to actually pull the trigger from the time when they figure that they recognize that they want a divorce to when they actually file their documents, women, it tends to be a little bit a little bit faster in some respects. But for some reason, man, it just takes it takes a little bit longer time. And that was me. I mean, it was it was one of those things where I knew that it was starting to, I just knew, right, I knew I knew about to probably about two, maybe three years ahead of the time, when I actually asked for a divorce that I that it was probably going that was where we were headed. And even as a financial planner, I could have done many more things and done a much better job of preparing her and myself for the divorce that was was going to be coming here. And I think a lot of it comes down to the fact of really just trying to figure out what your post divorce life looks like. And a lot of people just are just so focused on the emotional aspect of things and, and maybe or have some concerns about the finances and what that's going to look like and so on, at least while they're going through the divorce. But the thing that a lot of people fail to do is really just take some time to consider what the post divorce looks life looks like. Because that's where we can come in as financial planners and defined as financial advisors to help them figure all that stuff out. So that's that would be the first thing I would start with. And then there are some mechanical things and some steps that they can take to to actually, you know, put themselves in a much better position where we can talk about that here in a second.

Steve Altishin
So you used we a couple times. Is there. This is not a me against you thing, necessarily. This is this is you know, the better they both get out of it, the better everyone is on it. It feels like that to me at least. So when, when should I start doing things like getting a hold of even my financial information? If, because I know that I'm going to need it probably for a divorce coming up. But you know, where and what kind of things would you be looking for atleast?

Jamie Lima
Great question and what we tend to see, as you probably can experience on your side of the table, when we, when we work with clients that are going through this exercise, there usually tends to be one person that has all the financial information. And this is not to be sexist, but and I've said this in other podcasts who so not to be sexist, but usually it's the man who has been steering the ship from a financial perspective, they are the ones that have met with a financial advisor, or they've made all the investments, or maybe they were the breadwinner, and they have the bigger 401 K and all these things, and they tend to be leading the charge. And that was that was the same situation in my own divorce where I'm obviously in the in this business, but even so I was the breadwinner, and I was one that was saving for retirement and all doing all these things. And she didn't really have an understanding of really what was out there. So the first thing you could do, if that's you, and whether you know, whether your whatever side of the coin you're on, if that's you and you're listening to this, I would say the first thing you want to do is start organizing that information, learning where the bank accounts are, and how many credit cards do we have? How many brokerage accounts do we have? Do we are using multiple custodians. And when we say custodians, we're talking about companies like TD Ameritrade and Charles Schwab and UBS and things of that nature. That's, that's what a custodian is. And I would really just start figuring out if you just get a lay of the land, so to speak, and try to figure out where all the all the assets are, and start to document it. And that that would be a great first step. And I think, aside from the investment stuff, also the personal property, I would go room to room and start taking inventory of all the stuff you have. And because when you go into a marriage, there may be some things that may be pre marital, right? Maybe you have grandma's fine china, or you know, there was a gift that was given to you along the way that you consider your separate property. And then you start to over time, you start to commingle those things, and you start to like, you have your your furniture, then you have the family of the marital furniture, Mat, or different types of marital property, art and collectibles and things of that nature, I would start spending some time just documenting, you know, where they came from, who owns what and so on, because that will, if you work with your attorney, and you work with a certified divorce financial analyst, Mike, like myself, we're going to need that information.

Steve Altishin
Is this too early to start breaking away? And what I mean by that maybe is get a credit card of your own or set up a bank account of your own is, is that something that they should be doing even before? Or is that really something that doesn't necessarily have to happen? Or is that a case to case kind of thing?

Jamie Lima
I think it's a little bit it's a case to case situation. I mean, if you feel like you're a year or two out, there's probably no no real benefit of doing that. I say, if once you've vocalized, or once you or maybe you've even separated, and you haven't really vocalized just yet that you're going to want your want to officially go your separate ways, there comes a point where you're going to want to start having your own accounts, you're going to want to start separating those assets. And it's not because in just full disclosure, do not hide money, and do not try to hide money, because we will find it, we will find it. And if we don't find it, the opposing counsel will find it. So so you're just free to put it out of your mind. And we see we tend to see again, not to be sexist, but we tend to see that the men try to do this a lot. But we do ultimately find that that information, but there will be a point in time, where I usually tell people once you figure it out that you are you've officially separated and it'd be really good time to get for building your own credit and start getting accounts in your own name. And because that that'll be super helpful as you start to build out your post divorce life.

Steve Altishin
Okay, somebody files, and now a divorce is pending. I mean, obviously, I know there's got to be some some difficulties in dealing with finances during the divorce, and not the least of which is something we see a lot, which is, you know, people trying to sell or transfer assets without the court approval or the spouses approval. So when the divorce is filed, and you're sort of now navigating through to the wars while it's still ongoing. And I came to you and you'd say Well, that's the first thing I should do. What would you say?

Jamie Lima
Relating to the finances?

Steve Altishin
Yeah, well, actually, I could have used a lot of help, but we'll start with that one.

Jamie Lima
Yeah, I mean, I think if once you've once you've filed and you've started to build it because now you're transitioning from you're not necessarily preparing for it any longer. Now you're starting to now you have have to navigate the divorce process. And this can get sticky. And the reason being is because now all the emotions are flying everywhere, and you may not be in the right headspace to make good financial decisions. So to your point, I would not be making any major financial decisions while I'm going through this exercise, I wouldn't be taking out a car loan, I wouldn't, you can probably open up a credit card, and you start working on building out your credit for for post divorce. But moving assets around and closing accounts and all that other stuff. It can make things very, very difficult as you're going through the divorce process. And it may not be it may not look good, either. In the eyes of the courts, if you're playing, if it looks like he may be playing a little bit of a shell game with some of the assets that you have, whether you're whether it's it's because you are trying to hide assets and information from your ex spouse, or it may just be an honest thing that you're trying to do. But it just the VT the the optics of it don't look great. So I would I would I would avoid at all costs, making any major financial changes at that point.

Steve Altishin
At some point during the divorce, it's going to come down to flooding assets to the division of property. And I imagine that that's when you kind of strap your boots on and can get involved because I you know, I can come What if they come to you? And I say well, hold on here. We have this bank account, and we have a house and we have a 401k? And oh yeah, there's a pension. And so what should I take?

Jamie Lima
Yeah, we this is this is where we earn our keep for sure. As as a certified divorce financial analyst and as a as a financial planner, in general, I would say if we're if we're being brought into the equation that far along there, there may be some things that we need to go back to the drawing board on and, and maybe go back to the beginning on, I usually tell people that if you once you have decided that you're going to drop the D word and ask your spouse for a divorce. That's when you want to create team you. Right, that's when you want to you want to if you have to when you think it's gonna be contentious, and you want to go through the league proper legal channels, that's when you want to hire a great attorney. And you also want to hire your CDFA to help you with the financial aspects of it. Because as you know, as you know, see, if you mean, we're experts in the financial aspect of it, you guys are asking experts on the legal aspect and creating that team you can put you can put you as the client in a much better, much better position in the long run. So I think I think when it comes down to division of property, that's where you people will really start to see the value that we can bring to the SEC to this experience for them. Because it's not always just about splitting assets down the middle. In retirement accounts have different tax implications of being a being split up, then then does your house or your brokerage account or your checking account. And depending on what kind of asset you have, and how you hold that asset, whether it's in the name of a trust, or whether that's in your individual name as an IRA or a 401 K, there can be major tax implications of, of doing distributions and moving money around post divorce. So, so absolutely miss this, I think it takes the most time for us as CDF A's. But it's only because we want to get it right. And in my experience, it's as long as we have the information that we need to gather from you. And we understand where all the all the bodies are buried, so to speak. As far as these accounts go. We can easily, you know, give you a plan, a roadmap to show you an injury attorney like this is the most viable option for everybody. And it's not about not to belabor the point, but it's not about trying to get one over on the other person and walk away put yourself in a much better position, what have you all our job is as CDFA is, as I think you would agree from an from a legal perspective, is just to make sure this is a fair and equitable settlement for all parties. And so so that's that's, that's what we I think we're where we add the most value, we add a ton of value. But if you look at the overall engagement, that we can add a ton of value there.

Steve Altishin
We sometimes say and I think maybe you do. The the concept of time is is not always included. And what I kind of mean by that is well, here's $100,000 cash, and there's a $50,000 Last month or something, and well, you know, this has to be better than that. That sort of explaining of time, can you just kind of just talk a little bit about how that configuring because it's the divorce maybe over eight months, but the rest of the time keeps going?

Jamie Lima
Absolutely. And that's in our world, we call it the it's the time value of money. And that's, that's what the term we use in our world. And if you have, if you have a retirement account that's earning you, let's just say, on average, you know, seven or 8% a year? Well, because of the if you're taking the growth of that investment coupled with the we're factoring inflation, which we're all feeling the pain from, we're looking at, you know, record levels of inflation that we've seen, we haven't seen in years and years that we're all dealing with, right now, that $100,000 that you have in a savings account that's earning you, if you're at a traditional brick and mortar bank, you're probably getting a half a percent of interest on that account. If you if you have it at an online bank, maybe it's a little bit better, maybe you're getting three to 4%. But it's still not seven or 8%. So that's what we will look at is the time value, how the time value of money will impact you. And we'll try to figure out a strategy to say, Okay, well, how do we want to divide this asset up, because you have one over a year that's generating seven or 8% a year, it may be a lower value right now, but three 510 years into the future, there's going to be a point in time where that the value of that account is gonna be much greater than that $100,000, that sitting there, that's getting a half a percent. And let's not take into consideration but let's also take into consideration the fact that five and 10 years into the future, the dollar that you have in your pocket today is not going to be worth that same dollar in the future because of inflation. So that $100,000 account may only be worth 70,000, in just a few years, based on the impact inflation has. So we have to take all of those things into consideration. And that's not in most people that go through this exercise. Avoid all that. Just look at the snapshot in time. Yeah, this is what we have today. This is what we this is what these were all the all the cards laid out on the table. This is what we have, how do we divide it fairly? And you have to take all these other things into consideration to ensure that five and 10 years in the future, you haven't shortchanged yourself?

Steve Altishin
Yeah, I imagine guests sort of work the same way.

Jamie Lima
Exactly, exactly. Mortgages and credit cards, and who's going to take what, because we we see that happen a lot where you have one person that takes maybe that it was some marital debt, they have a credit card or two that they've incurred some marital debt. And they say, Well, you know, okay, I'll take this debt over here. But you take that thing over here, and that just wipes it out. And not necessarily because if you're paying 21%, or 25%, on your credit cards over here, and this thing over here is only earn, you know, only 5%, then there's the discrepancy in the interest rate, and then the overall cost that that that's going to cost you for however long you have it.

Steve Altishin
So at some point during the divorce, I know that you know that a part of what I do is start getting people to look at the post divorce. And I'm assuming maybe at some point that happens to your clients, it's like, you know, we're almost there. But I haven't really made any plans about what happens afterwards. And I just realized that, that, you know, we no longer have one expense on 15 different things. We now have two expenses.

Jamie Lima
Yes, your what you're talking about is like there now you have in some cases, we now we have people that are supporting two households. Yeah, right. You have, you know, it was the same situation. In my case, I left after the, you know, before the divorce was finalized, and my wife, my ex wife, now, we have three kids between us. And it gets to the point where it's like, Okay, after the divorce is finalized, I have my life over here that I have to rebuild. And I also have a family I have to take care of over here. And even though again, this is one of those things where I should have personally, I should have worked with a CDFA to figure all this out, because even as a certified financial planner, myself, I wasn't in the right headspace going through going through my divorce. It was very contentious. And it was there was a lot going on. It wasn't it wasn't why am I doing but I have evidence of this. I'm not sure I'm not just biased here but and but I just wasn't in the headspace to figure that plus I was working full time and everything else. So I didn't really get project myself out three to five years after the divorce to try to plan accordingly. And so what we do now with the clients that we work with is even when we start the when we initiate the the relationship, one of the very first exercises I'll take them through is goal setting. So we'll look at what are your goals So, before before the divorce, right, like in before and during the divorce? What is your what do you want child? What do you want custody look like and child support and alimony and all those things, we'll just walk them through that if they had a magic wand, like, if you have a magic wand, what do you want us to look like? If you had to guess what is your spouse want this to look like? Just so we can see if we can, we can find some commonalities amongst the two to help with negotiations and really lead the mediation process. But that also helps us define what do we want the post divorce look to look like? And help them start to make realistic changes today. And in real, in many ways, really figure out like, is what I want to happen after the divorce realistic based on the based on what I have to work with at this point. And that can that includes, you know, the assets and? And the budget? Yeah, so let's work on that early on.

Steve Altishin
Okay, you've done all this work with your client. I'm setting up on this, they've done all this work with your client. And the divorce is just about over, you've given them advice. And you next time you hear from them is you know, a few months after the divorce is over, and they hand you the decree and you go What I always ask people I mean, you know, what, what would you say to someone or about who hands you the decree? And doesn't doesn't show it to you before they sign it?

Jamie Lima
I will probably take in smack in the back of the head. But that

Steve Altishin
I mean, that's your that's your last bastion of sort of defense?

Jamie Lima
Yeah, you're absolutely right. I mean, once once that once that decree is signed by the courts, that is a, that document is no longer living and breathing, that document has is baked, and there's not a whole heck of a lot you're going to be able to do with it. Ideally, we're working with the attorney all along the way. So that doesn't happen. Yeah. And that's where you're going back to creating team you and not and I'm not here to tell the attorneys to how to do their job and what my job is just to give them the facts. And basically say, here, you know, Mister, mister missus attorney, this is mathematically speaking these, this is the most favorable outcome for everybody. Or in some cases, it's here's Plan A, here's Plan B, and here's Plan C, these are the pros and cons. Let's let's figure out what's going to work the best for everybody and what you think you can do and make happen, and in the most cost effective way. And, and once but once that once that decree is finalized, it's it there's not a whole heck of a lot we're gonna be able to do. Yeah. So let's

Steve Altishin
did that we're done. The divorce is over. And you've talked about recovering financially from a divorce. Now, I'm sure that you would rather you have been with them during the pre and, you know, pending stayed, but even if they're not, I mean, they come to you after the divorce, can you still help them? I mean, what, what kind of goes on and the recovering financial aid from a divorce?

Jamie Lima
Absolutely, we usually will transition our clients from the divorce engagement over to a traditional financial planning engagement. And that's where that that's why we created two companies, one being focused on the divorce financial planning, which is Allegiant divorce solutions. And then Woodson, Wealth Management, which is the company that I mentioned earlier that I started three years ago. And that's where we do our traditional wealth, wealth management engagements. And you don't have to have a lot of wealth to work with us. But we work with some people that are really just starting off and trying to try to learn the ropes of managing investments and their cash flow, and so on. So don't let the wealth management component of that steer you from reaching out from us. But that's what we'll do, we'll just we'll shut down one engagement, once the once the divorce is finalized, and that, that everything is done, we usually transition them over, assuming they want to continue to work with us, and they're still comfortable working with us in that capacity, we'll move them over to our traditional Wealth Management offering. And that's where we'll, we'll go back to basically square one. Let's look at the budget again, let's make sure that what we thought was going to happen and what you thought your lifestyle was gonna look like, a week or two, or you know, a couple months after the divorce is finalized. Are you spending as much as you thought you were? How do we make adjustments for that, and it may sound Elementary, but it's so very important to start there. So we'll go through and we'll look at every line item, credit cards, we'll look at bank statements, things of that nature, and just help them reorganize their newfound life. And then we'll start in on going back to the goals that we've set in the previous engagement and looking at like you told me six months ago or a year ago that this is what you envisioned your lifestyle to look like and what you want your life to look Like, is that still realistic? Is that still what you want now that you have some time to clear your head and catch your breath, and then we'll and that's where we'll start. And it's a matter of really just trying to put a plan in place around that. So it's we try not to do too much all at once. It will, it will slow roll it, but for the most part, it's just helping them transition and really get themselves back on their feet, so that they can achieve the you know, so they can achieve the goals objectives that they have for the remainder of their life.

Steve Altishin
Yeah, I love that. I love that. And I I imagine that you probably get because we probably get to send you a lot of times, it'd be one of the spouses who comes out with a pretty good amount of assets. But they were never the person like you said, who is doing the financial planning? They don't have a financial plan. They don't have maybe even investment, they might have a retirement accounts from work. But now they've gotten some money. So are those kind of people I mean, a lot of people think that Well, I don't want to go them. I don't have any investments. And maybe that's a good reason to go to you.

Jamie Lima
Absolutely. And and that's that's exactly who we work with, you know, usually it's maybe the house has been sold. And now they have this lump sum of cash and they don't know what to do with it. Or they've had to through the Quadro they've had to separate their retirement plans, or you mentioned pension plans earlier, pension, people that hold a pension plan are kind of a dying breed. So we're not seeing too many of those situations any longer. But there are we work with some older folks that are going through divorce. And they may, you know, they may have something that's that's still in existence. So, yeah, I mean, it's a matter of really just again, going back to where we were before, which is just helping them figure out what their goals objectives are, and try to figure out a strategy around that, and the assets that just landed in their lab, so to speak. And you're absolutely right, a good majority of people that do end up with this, this money, whether it's whether or an asset, whether it's the house, or what have you. They're usually the ones that are coming to us because they haven't had to deal with this stuff before. And in many ways, you know, because they don't teach you this stuff in school, we have to educate them on all this stuff. Like, what is a stock? What is a bond? Just going back to the basics. And again, it may sound a little Elementary, but we consider ourselves educators more than advisors, most of the time. And that's, that's, that's what we'll do. We'll just sit with somebody and help them figure it all out. And it's in it's, it sounds very easy. And and but it's, it's what we love, we love to do it. You know, I love to do it.

Steve Altishin
Yeah. So if, you know, we get a lot of divorces that are older people and so they get divorced and they're, you know, seven years from retirement. eight, whenever. Is that too late to come to you?

Jamie Lima
Never, never we deal with a lot of it. The I think the term is called the Great divorce, the grey divorce.

Steve Altishin
You know what they call it now, my generation? It's now called the grayby boomers.

Jamie Lima
The grayby boomers. Okay. I have not heard that. I have not I'm going to use that. I mean, I'm jotting that down right now. That's excellent. We it is not it is not too late. By any stretch. I feel like it what I have seen is that people will they've already spent so much money or they anticipate spending so much money on their attorney that they're afraid to add one more expense of hiring somebody like myself or you know, if you don't have to work with me, I mean, any CDFA out there, I'm sure you can find somebody in your in your neighborhood. But what I've seen personally, is that people are a little a little afraid to spend money because they like okay. We have a lot of expenses already. And now we have to pay for returning and he has to pay for an attorney and then I'm going to add this financial advisor into the mix. And I'm really no it doesn't stop. Is there any value in it. But what we see happen is because we're doing because our rate is usually a lot less than an attorney as well. We do it we can do a lot of the legwork of helping you prepare, even even prepare framework of settlement when it comes to assets and things of that nature that you can then pique to your attorney, which is going to save a ton of money in the long run because we can do it not only can we do it faster, but we have all the tools and resources to that we can leverage that can make sure we can we don't burn your time. Yeah. But you know, when we are hourly rate is less and we can do a lot of this legwork. And then you can take it to your attorney and say okay, here's, here's what we think is and this is and this is why and we can read we can write up the will write the settlement for you and the summary I'm sorry, we'll write the summary of the settlement and all these provisions and what have you. And then your attorney can take that and see if they can get a settlement without even having to go to court on that. And that's gonna save a ton of money right there just so it's like anything else you do sometimes you have to spend money to save money and that's that's kind of where we come in.

Steve Altishin
That's that's exactly why we I mean that that is one of the main reasons it's that, you know, you can get it done so that the case doesn't have to, you know, go on and on and on. And you know, I always tell us and people have heard it before, but you're the expert. I mean, I talked about when my kid was born, and we're all in the room and the doctors and they lift up, they go, do you want to cut the umbilical cord? I'm looking around going well, isn't someone here more qualified than me? So I totally get that. So as having said that, we blew through 30 minutes, I would love to talk to you again. But for now, we have to go. So thank you so much for sitting down today and talking about this. This is just great advice. Before we go, though, please tell people how they can get a hold of you.

Jamie Lima
I think the easiest way is just through our website, which is Woodsonwm.com. All my contact information is on the website. We're still working on a revamp of the divorce planning website. So that's not ready to go just yet. But Woodsonwm.com will be the easiest way to reach out to me, my cell phone is on there. So you have access to my cell. You can call me or text me if you do have follow up questions. And then my email address is on there as well. Easy peasy.

Steve Altishin
I love it. Thank you. So thank you again for joining us.

Jamie Lima
Thanks, Steve.

Steve Altishin
And thank you everyone else for joining us today. If anyone has further questions on today's topic, we can get you connected with Jamie. So until next time, stay safe, stay happy and be well.

Outro:
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Pacific Cascade Legal, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at pacificcascadelegal.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.