Scared of Divorce Finances? Start Here | 72

Remember being convinced there were monsters hiding under your bed when you were a kid?

Divorce finances can feel a lot like that. The more you avoid looking at them, the scarier they become. But when you finally turn on the light and take a look? Most of the time, they're just dust bunnies.

If you've ever thought:

• I don't know enough about our finances. 
• My spouse handles most the money. 
• Where do I even start? 
• What financial documents do I need for divorce? 
• How am I supposed to figure all of this out? 

You're definitely not alone.

My co-host today is family law attorney and Certified Divorce Financial Analyst Alexandria Zeis, and we're talking about how to take the fear out of divorce finances and get organized one small step at a time.

We'll chat about:

• What documents you'll need for divorce and mediation 
• What to do if you've never been the "money person" in your marriage 
• How to get organized before divorce without feeling overwhelmed 
• Why understanding your finances can actually reduce anxiety 
• How divorce financial disclosures work in California 
• Why pulling your credit report before divorce is so important 
• How to figure out what it actually costs to live each month 
• What an Income and Expense Declaration (FL-150) is and why it matters 
• Why this can be an opportunity to design the next chapter of your life 

The financial side of divorce doesn't have to be scary.

You don't need to become a financial expert overnight. You just need to be willing to look under the bed.

Chances are, those financial monsters are really just dust bunnies.

About Kelly Bennett, Esq.

Kelly Bennett, Esq. is the host of  The Splitting Smart Podcast. She is a senior attorney at Sapere Law & Mediation in Temecula, California. 

About Alexandria Zeis, Esq.

Alexandria Zeis, Esq. is a senior family law attorney at Sapere Law & Mediation in Temecula, California.

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RESOURCES

Divorce Financial Documents Checklist: https://mailchi.mp/1d960ec43ed4/uxo2ul4l62
KELLY'S BOOK: Victim Is Not Your Name https://a.co/d/e4VguRk
LEGAL & MEDIATION HELP: https://saperelawfirm.com
INSTAGRAM: https://instagram.com/saperelawfirm
FACEBOOK: https://facebook.com/saperelawfirm

Transcript

Kelly Bennett: 0:00

When we were kids we would be convinced there were monsters under the bed at night. And we would go through all this panic and anxiety and nightmares and all this stuff. And then our parents would come in and turn on the lights and pull up the bed skirts and say, "Look." And you didn't want to look because you didn't want to see the monsters' beady eyes staring at you from under the bed. But when you looked, what do you find? You find dust bunnies. So that's really what this is very much like is you got dust bunnies under your bed, not big monsters, in this financial area. It's a really great opportunity to go, "Okay, I'm going to master this. It's not that hard." Welcome back to another episode of the Splitting Smart Podcast. I'm Kelly Bennett, along here with Alexandria Zeis, or Zeus as we like to call. Hey, Zeus. Welcome back.

Alexandria Zeis: 1:06

I'm going to answer to it.

Kelly Bennett: 1:08

Alex is our senior family law attorney here with Sapere Law and Mediation, and one of the things we're talking about today is finances, the big money stuff, and here's what I love about Alex. Not only are you a longtime family law attorney but Alex is a certified divorce financial analyst. That's like a special certification where she really is great at crunching the numbers. So as we talk about, hey, what do you need financially, what kind of financial documents do you need to prepare for divorce and go through your divorce and, and/or your divorce mediation, Alex has that enhanced experience. She's the guy in our firm who takes all of that information. especially from the other side if they're being funny, and she can crunch the numbers and find the inaccuracies and all of the things that, hey, just doesn't make sense.

Alexandria Zeis: 2:03

And you know, it's your life. So if you don't understand hedge funds- that's normal.

Kelly Bennett: 2:11

We all understand hedge funds, Alex.

Alexandria Zeis: 2:12

That is, that is completely normal. So but you shouldn't be afraid of asking about them. So I really recommend that if you are not savvy in finance-

Kelly Bennett: 2:27

It's okay…… Alexandria Zeis: you need to find find someone that you feel comfortable asking questions to. Because I get it all the time, like,"I'm sorry, I know that this is a very stupid question," and they're not. They're really good questions. But if you never ask them, you're never going to get the answer. Right. So that, yeah, and I think that's a really good point. Yeah. Don't be afraid of it because a lot of times it's pretty common in most marriages actually where one is in charge of all the finances and the other one is stronger in other areas and in charge of other things. And so we often have people who, one of them is, feels like they're at a complete disadvantage in the divorce because they are not up to speed on all their own personal finances.

Alexandria Zeis: 3:13

And when you don't know, I mean, you don't know what you don't know, but at the same time, you can't just sit back and expect the other party… and you're in a lawsuit.

Kelly Bennett: 3:26

Once you're in the middle of… Not that it… I mean, you can still be civil and not hostile, but they're not there to do it for you anymore.

Alexandria Zeis: 3:32

But they're not asking their financial advisor about what would be good for you and your portfolio based on what you want to do with your life next.

Kelly Bennett: 3:40

True. True.

Alexandria Zeis: 3:41

And quite frankly- You gotta know what's out there to know what you want, you want or you don't want.

Kelly Bennett: 3:48

Yeah. Yeah.

Alexandria Zeis: 3:49

And better to do it during the divorce than, you know, after you've already signed.

Kelly Bennett: 3:54

Yeah. And we'll talk about this a little bit more in a second, but the bottom line is a lot of people panic over the idea of divorce, especially if you had not been intimately involved in your own finances. And you look at it, you can choose to be overwhelmed or say, "This is an opportunity for me to really start figuring it out." Because once you start paying attention to it…

Alexandria Zeis: 4:17

Mm-hmm… Kelly Bennett: All of a Yep. All of a sudden it's the - I call them the monsters under the bed. You know, the things that you fear the most kind of get reduced to nothing once you start to get the information. I actually talked about it in Victim Is Not Your Name, where people have all this fear, and we talk about the monsters under the bed. Like, when we were kids we would be convinced there were monsters under the bed at night. And we would go through all this panic and anxiety and nightmares and all this stuff. And then our parents would come in and turn on the lights and pull up the bed skirts and say, "Look." And you didn't want to look because you didn't want to see the monsters' beady eyes staring at you from under the bed. But when you looked, what do you find? You find dust bunnies. Right? A sock or two.

Kelly Bennett: 5:02

And, yeah. So that's really what this is very much like is you got dust bunnies under your bed, not big monsters, in this financial area. It's a really great opportunity to go, "Okay, I'm going to master this." It's not that hard. You don't have to have a certified divorce financial analyst credential.

Alexandria Zeis: 5:23

No, you don't. But I mean … I grew up in a family of artists. There were no savings. There were no investments. So if I can understand what's going on in, you know, your personal estate, you can do it, too.

Kelly Bennett: 5:37

Yeah, for sure. So let's talk for a second about, so you decide you're going to go through a divorce, or you're being told by your spouse that they no longer want to continue in the marriage, so we're facing a divorce one way or the other. What are the financial documents that you need for a divorce? And you do need the financial documents.

Alexandria Zeis: 5:56

And you're, you're going to need them throughout the divorce, so you might as well just get ahead of it, because if you procrastinate, it's only going to get worse.

Kelly Bennett: 6:04

Yeah. That creates unnecessary stress. In California, all parties, whether you're in a mediated divorce or in a court divorce where you're slugging it out down there in the trenches at the courthouse, California requires that each spouse complete what's called a Schedule of Assets and Debts. As well as an Income and Expense Declaration. So these two documents are really important and you're required to do it at the beginning of your case, and then you're required to do it at the end of the, your case. Let's say the case is drug on for over a year, you're going to go to trial in a couple of years. So right before trial, if we've had all this space between the first set of documents and trial, then you have to update those. Those are called your Final Disclosures, and your initial ones at the beginning of the case are your Preliminary Disclosures. And they have a few other documents, but the main ones we're talking about is the income and expense declaration and the schedule of assets and debts.

Alexandria Zeis: 7:07

And really, they're just fancy different names for a balance sheet so that's all the property items. And then a profit and loss, where it's the income and the expenses, it's the funds going in and out that that looks at. So they're doing two different things. So that you need to have both to understand what property is, you know, involved in the divorce, but also what are you living off of, what expenses are hanging out there that you've gotta, you know, be aware of and pay.

Kelly Bennett: 7:38

Right. And so let's talk for a second about the Schedule of Assets and Debts. So that is a form that starts off, tell us about all the assets, all the assets that you know you have. You might have some inheritance, maybe you bought a rental property with inheritance and that… You say,"That's my separate property." Doesn't matter, you have to put it down there. So it's all income, or it's all assets, right that you know that you have, that you know…

Alexandria Zeis: 8:03

or may have… Kelly Bennett: or may have, you know you know that you have together. So you're disclosing all of the assets: your cars, your real estate, your jewelry, your… What's the other stuff on the list? All your bank accounts. You do not have to go through your house and itemize every piece of property. So let's-

Kelly Bennett: 8:22

Yeah.

Alexandria Zeis: 8:22

Uh-

Kelly Bennett: 8:22

You know, we're not going to we're not going to put every knick-knack, every candlestick on the forms.

Alexandria Zeis: 8:27

Yeah.

Kelly Bennett: 8:28

So we're looking for all the assets. Then the second piece of that same form is what are all the debts? So you list all your credit card debt, you list your loans, your home loan, your taxes. Oh. All of that. So we're looking for property assets, and then debts. Why do we need all of that? Because when it's time to figure out how to divide your community estate, we need to know what the whole picture is, and it also gives us the ability to start to negotiate. So we will take all that information and we will put it into a computer program and we'll say, "If we give husband this asset, and then we give the wife this asset over here, and then maybe we give the husband all the debt and wife more assets," what our program's going to tell us is, "Well, how do we equalize this?" If she's getting a lot more than he is, then she might owe him an equalizing payment. So we, we play around with it, and if it's something that doesn't work for us right, or our client, then what we're going to do is we're going to say, "Okay. Well, what if we give him more of this and her less of this? How do we equalize it?" So your assets and your debts. That can be overwhelming because the forms require that you attach statements to all of these things. I mean, there's, there's a lot of attachments that go on. So we have a little checklist that we use here in the firm for both our mediation clients and our court clients, and we give them this checklist, and what it does is it mirrors the form right? It tells you… it's like go start gathering your mortgage statements and your, the deeds and the titles to your cars, and we need the last, the most recent bank statements for those savings accounts.

Alexandria Zeis: 10:11

It outlines the documents you need. So it's not just all the documents related to this asset. It's these are, these are the specific documents that you either need to find, or you need to figure out how you can get them and who's got them.

Kelly Bennett: 10:25

We say, you know, "How do you eat an elephant? One bite at a time." So you take the checklist, and you just start going, "Today, I'm going to devote an hour and see how far I get. Then I'm going to calendar another hour," and before you know it, you'll have it done. It's not a huge, huge thing to do. You just do it in small bites.

Alexandria Zeis: 10:44

Yeah.

Kelly Bennett: 10:44

So what we want to offer you is we are happy to provide you with this checklist because it is so valuable, especially if you're not in the middle of a divorce right now and you're thinking about it.

Alexandria Zeis: 10:56

Yeah. Just if you've got questions, I mean, I've literally had people reconcile because one person thought that the other person was doing something on the side with the investments, and it became this whole just, you know, just very toxic suspicion going on. And then once they actually sat down and talked about it, that went away, so it didn't get to the point where they actually needed to separate. So if you've got questions or you just want to know what there is, now's the time to start figuring it out.

Kelly Bennett: 11:29

Yeah.

Alexandria Zeis: 11:29

And then you don't have to rush about it later, and you can take the time.

Kelly Bennett: 11:33

Yeah

Alexandria Zeis: 11:33

to

Kelly Bennett: 11:34

ask. Yep. So what we're going to do is we'll put a link down below this video. And you just click on the link, and it'll tell you how you can get a copy of our checklist, and we're happy to send that to you. It's really valuable… Alexandria Zeis: I will say, too, here… most of those documents are also something you probably want to keep in, like, the emergency go bag. Right.

Alexandria Zeis: 11:54

So it's not a bad thing just to have.

Kelly Bennett: 11:56

Yeah, in the fire safe. Yeah. So we're in Southern California, if you're watching from another part of the state or another part of the country, and we are…

Alexandria Zeis: 12:04

…it's all fire country.

Kelly Bennett: 12:04

Yeah. We are in wildfire land. So just about everybody has fireproof safes. And some people aren't using them right. You should put all those documents in there.

Alexandria Zeis: 12:14

Yeah. And then you don't have to worry about the policy burning down with the house.

Kelly Bennett: 12:19

Right. Okay, so back to the financial documents you need for the divorce. And then you're going to complete what's called an Income and Expense Declaration, and that's like a little budget. And it's how much things cost on a monthly basis. Now, when it comes to disclosing all this in a divorce, Alex, how important is it to be completely financially transparent?

Alexandria Zeis: 12:41

I mean, I think it's good for you. I think it's good for them. If you start off with a number that you just came up with, it sounded right And you haven't put any thought into it. Well, now you've given the other side a number, and they're going to be fixated on that. And very rarely have you gone you know, so high or below that it would be in your best interest later to say like, "Oh no, I, I missed $5,000 worth of expenses. I can't pay my bills."

Kelly Bennett: 13:10

Right. Right.

Alexandria Zeis: 13:11

So you have to be truthful with yourself, but you gotta be truthful with them, too.

Kelly Bennett: 13:14

Well, and it's also your credibility. Right? So right now we have a hotly contested court divorce case going on, and one of the spouses, she's giving us her disclosures. And so what she's claiming is that she has no income. We know she has three businesses on the side and she collects cash. And what she puts on her Schedule of Assets and Debts is no income, very little assets, but then on her debt section, she listed no less than 12 personal loans from… and just named all these random people on there, and they totaled about $1.3 million. So who has personal loans of $1.3 million and no income and no assets? Very hard to believe. And the kicker of this is you're supposed to attach copies of the loans. And loan statements. Nothing.

Alexandria Zeis: 14:10

No.

Kelly Bennett: 14:10

Nothing. Right? So you don't want to start off like that and start playing games with the finances. Yeah. And oh, by the way, the law requires full financial transparency under the California Family Code, so.

Alexandria Zeis: 14:20

Yeah, so you have to get interested in this part of your life because you can't kind of turn a blind eye to it and hope that it's all going to be fine because if you are the reason that that other person made a mistake later, they can hold it against you in the divorce.

Kelly Bennett: 14:36

Yeah. So it's better to come clean right up front especially with your lawyers, 'cause we can't help people who don't help us help them.

Alexandria Zeis: 14:44

Right.

Kelly Bennett: 14:45

So.

Alexandria Zeis: 14:45

I mean, if you're telling us that you just need $5,000, we get you$5,000… And then that's not enough.

Kelly Bennett: 14:51

And you need, and you need $15,000.

Alexandria Zeis: 14:52

Yeah. You're not going to go back to court next week. That's just not happening.

Kelly Bennett: 14:55

It's rough. So let's talk for a second about mediation. Where do, how do these come into play in mediation? They are super important in mediation because you don't have lawyers on each side forcing you to produce all of this. What we do in mediation is you come in to us as the neutrals, and we have a whole prep system, and it includes getting the finances. So we help you with the financial disclosures for each side. They get them together because then as the mediator, we take that information before your first mediation session, and again, we're putting in all the scenarios for division. We also ask you to make a proposal in your prep work to us on how you think the assets and debts should be divided. So we look at each sides, and we put it into our program, and we say, "Okay, well wife thinks it should be divided this way. If we do that, then she's going to be owed a big equalization payment at the end, or vice versa. And husband thinks it should be divided this way, and are they close? How far off are they?" And we start from there. But that's, that makes sure that we're not leaving out anything in your settlement agreement. We've gotta address it all. So…

Alexandria Zeis: 16:06

Right… Kelly Bennett: One way or the They are required, but I want you to embrace them because they are absolutely a positive thing. Yep.

Kelly Bennett: 16:16

All right. So let's talk about even when you're not under the compulsion for mediation preparation or hiring a divorce lawyer and going to court, even if you're not there yet, what do we recommend you do with finances? Just not think about it?

Alexandria Zeis: 16:33

No. No. No. Never ends well. But I mean, there are things you can do. So there are a little bit of shortcuts where, you know, you can start getting credit reports, because that's going to have the list of all the accounts that are in your name. So then that's already giving you a list of the banks that you, you know, you need to go into or call and request that they provide you with copies of the statements. If you don't have them, you know, otherwise you've gotta go online and download each month. But if you have time, the bank will probably give you at least a year or two worth of statements, and they'll deliver them to you.

Kelly Bennett: 17:11

Right. It's… And that's super smart. And the credit report thing, super important because there are often errors on credit reports, especially if you have a relatively common name. We see it all the time on our credit reports because there are Kelly Bennetts. There's, you know, my husband Greg, Greg Bennett's all over the place. And we've identified accounts that are not ours, loans that are not ours. So there's so many reasons, and also, it's not uncommon to run a credit report and you go, "What, what is that?"

Alexandria Zeis: 17:44

Yep.

Kelly Bennett: 17:44

I don't recognize that debt." And so this tells us what? It may tell you about something your spouse has gotten you into without your knowledge. Super important to know way up front and in advance. Or at least you can ask them about it in a diplomatic way.

Alexandria Zeis: 18:00

Or if it's just hanging out there, you can call the creditor. You can figure it out before it becomes a big deal. You don't want to have to clean up the mess later.

Kelly Bennett: 18:08

Right. So. So, so run your credit. Start with the financial checklist.

Alexandria Zeis: 18:14

Maybe encourage your spouse to run their credit as well.

Kelly Bennett: 18:16

That's right. Ask them. Say, "Hey, I, we need to know about everything." There's ways of getting that if they refuse. And that usually is done in the court divorce context. But hopefully you'll get some cooperation there. And then the last thing that we recommend is, and I'm going to give you, tell you how to look it up, but remember I said you have to do an Income and Expense Declaration as part of your court divorce or your mediation. That form is called an FL, for family law, 150. So if you were to Google California FL-150 Income Expense Declaration form, right?

Alexandria Zeis: 18:55

Mm-hmm,

Kelly Bennett: 18:56

Probably if you just put FL-150, it's going to come up.

Alexandria Zeis: 18:58

It's true, all the time.

Kelly Bennett: 18:59

But it's going to come up and you will be able to download it, no charge. It's out there, because it's a public form from the Judicial Council of California. That's a that's a governing body that creates all of the forms that we use in family law. So FL-150 California Income and Expense Declaration, download it. And what that is, is it's going to allow you to fill out the form, and it's going to ask you, what is your total income every month? And from all sources, and it, and it prompts you through. And then it asks you, what are, what's your total income average over the last 12 months? You might not even know till you actually do the little calculation, and then you can see what it is. It's not going to go through the Schedule of Assets and Debts, just income, right, and your expenses. And then the next couple of pages ask you about your monthly expenses. It's beautiful. I used to have my kids do this when they were in high school. I would say, "We're going to learn budgeting," right? And so they got to see an income and expense declaration because it goes through your monthly expenses. Yeah. What's your rent or your mortgage? How much is your health insurance?

Alexandria Zeis: 20:04

Or what do you want it to be? Right. If you're planning for the future, and you know that you're going to move out and you need to find something, start putting those numbers in there so that you know what it looks like in, with the rest of your expenses.

Kelly Bennett: 20:15

Yep. It's the place to start because you put that, you put all of that in there, what your monthly laundry expense is, your insurance, all of it. It'll ask you for all of it. And then you you add it all up, and that'll give you your monthly net. Because if I asked you today,"What's your monthly net?" How much a month do you need to meet all your bills? You probably can't tell me off the top of your head. Most people can't. There are some people who are great with this. I'm going to give you another recommendation here too, another one He, the, he's… We're not sponsored or anything by this, but Dave Ramsey of the Ramsey Show. Dave Ramsey is the financial guru. I love that guy and respect that guy because you may not agree with his politics, but let me tell you something, he's made tons of money and lost tons of money early in his career. He hit bankruptcy when he was a young married, about destroyed his marriage, and he finally figured it out. You know, there's a, there's a quote in scripture that says the "the borrower is the slave to the lender." And that is so true, and Dave Ramsey talks about that. He's got a he's got a program called Financial Peace University. And it's basically teaching you basic finances and how to live debt-free and how to… He has a whole system for slowly but surely getting out of debt. I highly recommend it. If you just look up Dave Ramsey, Financial Peace University. It is an incredible online program. Doesn't cost very much money. But this is the kind of stuff that helps you go, "I can sleep at night. I'm going to lift up the skirts and I'm going to look at those monsters under the bed, and I'm going to find out they're dust bunnies."

Alexandria Zeis: 21:49

And honestly, I have met some incredibly smart people, and they had no idea what was going on in their financial lives. They had a financial advisor. They just kicked it over to them. They could not tell you anything about what accounts existed. So don't just think because, you know, your spouse is handling it, they actually know. It's better for you to try to find, figure it out yourself. I mean try to see the tax returns. Talk to the CPA.

Kelly Bennett: 22:17

Yep. And ask your CPA to explain the returns. There's no shame in that.

Alexandria Zeis: 22:21

They should be. That is- If they're, if they're looking at you funny and don't want to do that, they should not be your CPA.

Kelly Bennett: 22:27

New CPA.

Alexandria Zeis: 22:27

They are hiding something.

Kelly Bennett: 22:29

Most CPAs that, you know, we know and love here in our area, they are thrilled when people show interest. Just find one that speaks English, okay? Plain English. Not CPA language, so.

Alexandria Zeis: 22:41

Yeah.

Kelly Bennett: 22:42

All right. Well, I think that's going to do it for us for today. We'd love to see your comments or questions. Put them down below here. If you're listening go online to The Splitting Smart Podcast. You can always ask us questions there or hit us up on our social media accounts. but what a pleasure to talk about this subject. I know it's a subject that a lot of people cringe over, but you know, once you embrace it, man, it's empowering.

Alexandria Zeis: 23:08

Yeah. It really is. It really is because, I mean, that's… Now you can plan for your future. No one ever sat me down and you know, had me create a budget for myself or taught me about what my, you know, assets and what they were different. So this is kind of like your second chance at designing your life in the future. How do you want to do it?

Kelly Bennett: 23:26

I love that. It is it really is about designing your life. And it, it's exciting. It's exciting. All right. Well, we'll see you next time on The Splitting Smart Podcast.

Alexandria Zeis: 23:34

Bye-bye.