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Protect Your Money Before, During and After Divorce · The Conscious Divorce

• Justin: Welcome to the Conscious Divorce Podcast. I'm Justin Milrad. I'm a certified divorce coach, financial planner, MBA, and the founder of Reclaim and Rebute Transformational Coaching. This is a show where we treat divorce not as the end of your story, but as a plot twist. And we give you the strategy, the tools, and the honest conversation you need to write a better next chapter. Before we get into it, here's our standard disclaimer. Nothing you hear on the show is legal, financial, therapeutic, or medical advice. My guests and I are here to educate and to give you a way of thinking about your situation, not to replace the professionals in your corner. Laws vary by state, your situation is your own, and for guidance specific to you, please work with a qualified attorney, financial professional, like our guest, or licensed therapist, and of course, me a divorce coach. Now with that handled. Let me set up today's episode because this one is one of the most practical conversations we've ever had on this show. Here's something almost no one tells you when you start a divorce. The legal fight ends. The financial consequences do not. And neither does the weight they put on your mind. When one household becomes two, the math changes overnight. You lose what economists call economies of scale. Two rents instead of one. Two almost of everything, paid out of the same income that used to cover one home. And the research on what happens next is so poor. Peer-reviewed study out of Bowling Green State University using national data found that after divorce later in life, women's standard of drops by about 45% and men's drop by about 21%. Both lose roughly half of their total wealth. Let that sit for a second. Half. But money stress is never just about the money. It steals your sleep, it clouds your judgment, and it shows up in your body. And here's the cool part. The moment you most need a clear head to make a giant decision is the exact moment financial fear is doing everything it can to take that clear head away from you. So today we're going to do three things. We're going to look honestly at how divorce hits people at different ages and stages. We're going to talk about the mental weight of financial insecurity and how to carry it. and then we're going to talk about exactly how to protect yourself and rebuild. Not survive, rebuild. My guest today is one of the most respected voices in the country on the financial side of divorce. Leah Hadley is the founder and CEO of Intentional Wealth Partners and Intentional Divorce Solutions. She has nearly two decades in financial services, and she holds three credentials that almost never show up together on one resume. She is an accredited financial counselor, a certified divorce financial analyst, and a master analyst in financial forensics. Translation She does the planning, she does the divorce math, and she can follow the money when something doesn't add up. She's also the author of the Amazon bestseller, When It's Just Not Working, a Practical Divorce Guide for Stay at Home Moms. And she has a new book on the way called Intentional Money. And she didn't arrive at this work from a textbook. She went through her own divorce and rebuilt on her own terms. Leah, welcome to the Conscious Divorce Podcast. Leah Hadley: Thank you so much for having me, Justin. Justin: Absolutely. Great to have you. Leah, before we get into the numbers, can you share the short version of your story? What pulled you towards divorce finance specifically? Leah Hadley: Yeah, it was kind of an interesting, windy road to get here. I think I actually started at eight years old when my own parents went through a divorce. I witnessed, what that experience was like and being raised by a single mom and what that experience was like. Definitely had an impact. don't think I was as aware at that time, but it definitely had an impact. When I went on and started my career, I actually started. ⁓ as a teacher. So I my master's degree as an education ⁓ got really burnt out in the classroom ⁓ was struggling with student loan debt and I was like, I just got to figure something out. And I took a temp job and that temp job happened to be in an investment bank. ⁓ I was entering just as an administrative assistant, just trying to literally pay my bills and figure out kind of what was next for me. And I share that experience because I remember walking into that investment bank and just being completely overwhelmed by the fact that I literally, Justin, did not know what people were talking about. There was this whole language around creating wealth and finance that literally I had no experience with, I had never ⁓ even heard. And so I was totally a fish out of water. Very fortunate, I had some wonderful, wonderful mentors and they really took me under their wing. I became a publishing equity research analyst within that ⁓ investment bank, went on to become a senior analyst with another firm. ⁓ And then decided I was ready to start a family. And when I wanted to start a family, I knew that the lifestyle that I wanted would not work with a career in equity research. So I decided to start working with individuals and families. became a financial advisor in 2012. it wasn't that long after that, actually, a few years after that. that I was facing my own divorce. So here I was, I had been a senior publishing equity research analyst, I had been a financial advisor for years at this point, and I was completely overwhelmed with the financial decisions that I had to make, even with all this experience as a financial professional in my own divorce. And that really drives my passion for the work that I do, because I know that it doesn't matter what your experience was with the finances. When your life is changing so quickly and you're going through this huge transition, having support and guidance from somebody who just has a clear head is so valuable. Justin: Thanks for sharing that. You clearly have some ⁓ deep roots in this industry. And I I will say, as a divorce coach, the one question I get from almost every one of my clients is: Am I going to be okay financially? And that's a really difficult ⁓ answer. not every attorney is set up to answer this question for you. ⁓ You need know your budgeting, you need to know your quality of life. ⁓ And, you expect ⁓ and be getting a very large But it still doesn't mean that you have enough money. And that's why I think working with a financial professional is so important and really helps you, manage what I call the reality check, ⁓ but also manage your mental health because you'll have a better idea ⁓ of, life that you want to live and the life that you're going to design. Can you afford it? if you can, great. if you can't, you have to make some, significant plans for rebuilding. And ⁓ we'll definitely get into that. I want to talk a little bit about how divorce hits differently by ages and stage. and I wanna ground this in evidence because ⁓ age stage piece is part that people don't always understand and sometimes get wrong. the financial impact of divorce at 32 is completely different, than at 52 or 62. You know, starting with younger families, parents in their 30s and early 40s, the headline here is, really brutal in its simplicity. ⁓ When you split one household into two, the parent who ends up with the primary custody has historically seen a household income drop around 50%. if you a look at the national surveys, it's around 52%. same kids, same needs, roughly half money in different ages and stages. for your younger crowd. who are still raising kids, what is the financial mistake you see most often in that first year? Leah Hadley: younger families tend to have younger kids, there tends to be more of an emphasis, I think, ⁓ on some of custody-related issues, some of the parenting plan, all of that, ⁓ is definitely a focus for people ⁓ in that age Typically, we do tend to see people that do have higher amounts of debt in that age band as well. ⁓ which can be really challenging from a cashflow perspective, right? Sometimes people are still paying off their own student loans in those situations. Or even just looking at the cost of maintaining your current lifestyle, right? mean, lots of families that have kids that are very engaged in wonderful extracurricular activities, but there's a lot of cost that comes with those things as well, right? And so I think the families that we work with, the issues tend to be most around cashflow, right? ⁓ to looking at child support, looking at spouse's support, making sure that the family has the most income coming in as possible because now for most families, they really are trying to keep their kids' situation as comparable as possible and in doing so, trying to maintain two households at the same standard of living that they may have been struggling to afford honestly with one household. And so sometimes we have to make really hard decisions, Justin. in this timeframe that may feel like, and I hear all the time from parents, I just want the stability and consistency for my kids, absolutely, I understand that. But the reality is, if cash flow is tight month in and month out, you're going to start accumulating and accumulating debt, right? If we don't have enough to cover, we're gonna start accumulating debt. That stresses the family out, in my opinion, a lot more. than if you were to reduce the size of the household and live in a different situation. I don't think people fully appreciate the weight of trying to maintain a certain lifestyle that is just not affordable at that point. So I think especially families with young children need to be very realistic about what cash flow looks like, what it's gonna look like post and make decisions that are gonna keep their fixed expenses as reasonable as possible. to give them that freedom and flexibility from month to month, not having to worry about cover their expenses. Justin: That that's great advice. I know the house is a big one. being house poor and if, you decide to keep the house one of one of the spouses, often what happens is two, three years down the road, you have to sell it because you've become house poor and you just don't have the cash flow at that point. Something else that's really interesting is it's not just the adults who get impacted by the financial stress. The Census Bureau released an analysis showing the effects. reach kids also into adulthood. So ⁓ children experienced divorce in early childhood have measurably lower income into their mid to late 20s, roughly nine to thirteen percent. And that data even showed sharp jumps in teen birth rates. A big driver was simply that the household resources dropped and stayed drops. ⁓ This isn't guilt trip for divorcing parents. it's really just a sign to pay attention. It's an argument for protecting the financial foundation. ⁓ As hard as you protect the custody schedule. So let's move ⁓ up the age ladder to the fastest growing category, and the one your new book speaks to directly. Gray divorce, divorce after 50. Divorce among people 50 and older has more than doubled since 1990. For those 65 and up, it has quadrupled. Roughly 36% of all divorcing adults are now over 50. It's the only category of divorce in this country that's still rising. While the overall rate falls. And I just want to say, when I got divorced, I was close to fifty. And ⁓ the impact it had on me really has me thinking about whether or not I'm gonna be able to retire. I definitely won't be able to retire at the same age. and I know it it impacts people in a lot of ways. So, ⁓ ⁓ Leah, is the financial damage so much worse later in life? And why is divorce at fifty eight so much harder to recover from than At let's say age thirty eight. Leah Hadley: Well, time isn't on your side, quite frankly, when you're in your 50s and you're preparing for retirement. And I want to say, divorcing or non-divorcing, a lot of people assume that they will be able to decide when they're going to retire and retire at that age. And if that works out for you, that's fantastic. But reality is that our bodies age in different ways. Our brains age in different ways. Our employers change. There's definitely downsizing. Ageism is absolutely real. And so for a lot of people, they don't get to decide when they're going to retire. And so let's say we're working with a couple in their 50s and they're talking about planning to retire at 65, just as an example, right? And maybe all these years working together, they've done a great job of saving and investing and could absolutely, if they were staying in one household, still plan to retire at 65 and that might work just fine, right? But for some people, once they are saving and planning together and expenses are going to balloon because now two households instead of one household, that target of 65 may or may not still be feasible. But if I go back to where I started, again, sometimes we don't get to make that choice for ourselves, right? Sometimes we need to care for an aging parent or we are having health issues of our own or we're downsized and we're not able to find additional employment. And so it's really important that people have enough savings and investments that they have some flexibility around that time. We can't always assume, Justin, I'll just work longer. Maybe that might work out just fine for you, but for some people that's just not an option. And so I think that's one of the things that people have to be very realistic about. When we're working with people who are in their 50s, maybe their early 60s, they're really in the space of very seriously preparing for retirement. a lot of them have already had serious health issues. A lot of them have already had reasons why they maybe had to pare back from the workforce already, right? So all of these things are compounding when you're changing the structure of the family and changing the structure of kind of how you're spending from a month to month basis. And so it does mean that for some people, they do need to look at how can we really reduce our expenses if we wanna keep that retirement date, that target date right where it was. Justin: Great, great advice. Let's talk about health insurance. It's also one of those, quiet landmines, especially for someone in their late fifties who's not yet ⁓ Medicare How big a deal is that? I know that the cost of insurance goes up as you age. So how's that typically handled in divorces as you've seen? Leah Hadley: It's a bigger and bigger deal every year, Justin. I mean, this year, if we look at where health insurance premiums were this year relative to last year for our clients, huge, huge difference. I don't have the stats to tell you exactly how much they were up, but huge numbers is what we're saying. This is a major issue that people need to look at very directly and have a plan around. We encourage people to talk to a health insurance broker very early in the divorce process if they think they're going to have to get insurance. say they're on their spouse's insurance or maybe their employer doesn't offer insurance or something like that. it is nice to know that COBRA is available for a period of 36 months. It's typically 18 months. So if you leave a job, ⁓ you can extend that health insurance coverage under COBRA for 18 months. But if it's a result of a divorce, you get 36 months. So you do get some more time. And for some people, again, if you're dealing with a health issue or something like that, it might be really important for you to have that consistency of the access to the same network, same coverage and all of that. So that can be a really important piece, but sometimes it's just not affordable. And so really understanding exactly what all your options are, what the costs are associated with, what is the level of risk that you're protecting, really getting some clarity around that as early on in the process as possible is going to be so valuable because a lot of times, Justin, we find people and their expenses are ballooning, not again just because of the change in the housing situation, but again because of the change in the health care situation. Justin: Yeah, it's it's gotten so prohibitively expensive. So a couple of additional points. Number one, make sure it's something that you address in your settlement. if you go to mediation or you go to court, it's a very, very important issue. And number two, take good care of your vessel. when you eat well and you exercise, you're really reducing the chances of severe illness, ⁓ and ⁓ it will serve you you grow older and Hopefully keep your ⁓ health insurance, ⁓ costs a little lower. You may not have to go on the gold plan. Maybe you can go on the silver plan or the HMO plan, but ⁓ something think about. Leah Hadley: if you are in the middle of a divorce and you are dealing with a major medical issue and there is gonna be a change in health insurance, I do encourage people to reach out to the healthcare system that they're utilizing for their care because are programs in place when people do have major life changes. Sometimes you can get into a program directly with that healthcare system. We've seen lots of folks over the years who are dealing with. ⁓ like a cancer diagnosis or something that's of a longer term healthcare situation where they may need that continuation of care becomes even more critical. Sometimes, again, like saying, health insurance can be cost prohibitive, but some of those plans are actually just exactly what people need. So I always encourage people, you're in a situation like that, reach out directly to your healthcare system and find out what's available. Justin: Leah your work centers on women, but I know you cater to both men and women as clients. Why does the hit land harder on women? And what is the single biggest lever to change that out? Leah Hadley: Yeah, absolutely. I think it's less to do about gender and more to do about the role that somebody plays within the relationship around the finances. There are so many people out there who are operating from a place of just ambiguity around their finances. They don't have clarity. They don't know exactly what they own. They don't know exactly what they owe. Don't know how much is coming in. They don't know how much things cost. You're hearing this and that resonates. You are not alone. Absolutely not alone. ⁓ But to set yourself up for future success, you wanna have. clarity around your finances. That is critical. And so really understanding what the numbers are. And again, whether that's working with your partner, you know, if you're still in a situation where that's doable, that's great, but it might be working with your financial planner. It might be working with your accountant. You know, we have a fantastic program called the Empowered Sisterhood, where literally it's just a space to ask questions and have accountability and be in community. There's so many wonderful resources out there now. So if you're in a place of like that foggy kind of financial space, just encourage you to really get as clear on your numbers as you can. That's such a powerful step. Justin: Absolutely. want to slow down here because we've been throwing numbers at you, and numbers can feel abstract. Financial insecurity is not just a spreadsheet problem, it's also a nervous system problem. The American Psychological Association has found that around 72% ⁓ of Americans stressed about money, at least some of the time. Now, take that baseline and drop a divorce on top of it. Researchers have documented a real downward spiral. Financial stress fuels anxiety and depression. Anxiety and depression make it harder to sleep, to concentrate, to open mail, to make a clear decision, and basically to operate. That leads to worse money choices, which feeds more stress and around and around. The links are not soft. People carrying significant debt are roughly three times more likely to be dealing with a mental health problem. And in the grade divorce research specifically, things like food insecurity and depression don't just spike during the split. They can stay elevated for six years or more afterwards. And this is a part of financial security no one put on the balance sheet. And it might be the most important part. Leah, you sit with people in this exact moment. What does the mental and emotional weight of financial insecurity actually look like in your clients? And how do you help them, know, move through it so that they can make good decisions that aren't necessarily ⁓ by their current emotional state? Leah Hadley: This is such an important question. And honestly, I see the stress of the situation impact people in every way you can imagine. And one of the things that shocked me in doing this work over the years is the physical impact that I've seen. I've seen people really develop some very serious health issues as a result of either being in toxic relationship for an extended period of time or dealing with a high conflict divorce can really take its toll on the body. Obviously, people lose sleep. and sleep is so critical to our health. You know, people just become stressed and overwhelmed and don't focus on just taking care of basic nutritional needs, right? ⁓ so when we think about all these things that we're just kind of letting go out the door ⁓ not focusing on the basics of taking care of ourselves, it shows up in ⁓ area, right? ⁓ whether that is, ⁓ other challenges and other relationships in your life, it can impact your job performance. absolutely people taking on debt just to kind of get through the days and that kind of a thing. so really there's no limit if you allow it to. Now, I think that's really important to acknowledge that yes, we know this is a challenge. It's absolutely something that needs to be dealt with, but we can be empowered to deal with it, right? We can be empowered to focus on the important things, the basics of taking care of ourselves to make sure that we are in the best place to take care of our loved ones. Justin: One thing that I notice ⁓ that happens a lot is there's a lot of anxiety over what's our net worth? You know, if I were to go by the law and we split everything fifty-fifty, marital, what might I have? And a lot of people have no idea. Do I have a hundred thousand dollars? Do I have ten million dollars? Do I have three hundred thousand dollars of debt? They just don't know. Leah Hadley: you Justin: So, you know, what I've seen is once they gather that information and they start building their marital spreadsheet, sometimes they feel much more comfortable. Sometimes they're terrified, but it's an important data point to at least have some idea of this is going to be our starting point. So someone were to come to you ⁓ you know, you're going to try and help them figure out their financial situation. What are the most important documents that they need to pull together first? Leah Hadley: Yeah, I'll start before I get into the specific documents. If you are listening and you are a person who's looking at these numbers and that numbers themselves are feeling stressful and overwhelming, you can collect the documents without looking directly at the numbers. Okay, so you're going to need the documents is really important. But I find so many people who really truly are feeling the financial stress and anxiety get paralyzed around this particular issue. And if you don't have the documentation in place, it actually creates a lot more cost. to your divorce. So the more organized and clear we can get around documents, just recognize, be aware of yourself and what's going on with you. And if the numbers, again, if the numbers are what's causing the anxiety, just gather the documents so that way you're still making that progress moving forward. But as far as what documents, kind of where to start. You know, typically we tell people everything with a dollar sign on it. You're going to want the last three years of tax returns. You're going to want the last 12 months of basically every statement that you have. So retirement account statements, investment, credit card, bank account statements, like I said, anything with a dollar sign. You're going to want at least a couple of pay stubs from each party. That's going to be really important information. But basically, the idea is to just get a very clear sentence. of how has money been flowing, where is it living now, and how can we start to look at what a reasonable and fair settlement might look like. Justin: Yeah, ⁓ absolutely. What about minute someone gets served their divorce papers, what should ⁓ shouldn't they be doing in terms of spending money? Leah Hadley: So this is a good question and this is really important for you to actually understand what your paperwork says. And so you may want to consult with an attorney around what you are and are not allowed to do with your money at this point. Because I do see people make mistakes sometimes around this and it can create some issues for you in your case if you're not doing what you're supposed to do. So I think first and foremost, it's important to understand what are you allowed to do and what aren't you allowed to do, right? But you want to get clear, what is your plan for this interim period of time, right? Where are paychecks being deposited? Are they still going into a joint account if they were going to a joint account previously? Or are they going into individual accounts? If they're getting divided differently, expenses may need to be handled differently, right? But that's where this is a period of time when people start to get into the process and there's no communication around how to handle the day-to-day finances. That's where we see people starting to miss payments. whether intentionally or not, and these kinds of things. And so it's really important that you have some clarity around how are you gonna handle money in this interim period of time. Justin: Great advice. And you know, for for people who haven't yet retained ⁓ an attorney on one side, and if you're working through this, I definitely say, get the advice from ⁓ an attorney other professionals. Don't take the advice of your friends ⁓ and family. mean well. but I think the safest thing to do if you don't have your answer just yet, is just maintain, the status quo. Leah Hadley: Yeah. Mm. Justin: ⁓ one the things that comes up often is the discussion that, a dollar isn't necessarily a dollar. So in some cases, ⁓ you may be an after tax dollar that's in a bank account for something in a retirement fund versus ⁓ something in a stock account has huge capital gains. So can you talk a little bit about that? And in that conversation, I'd like to bring up the concept of the the quadro. For retirement assets. And then also I'm gonna add one more layer, but something to think about because we are talking a lot about ⁓ the grade divorce, things like social security, because those are areas that I see are often not discussed that may have tremendous value. Leah Hadley: Absolutely. So first and foremost, around kind of the different kinds of accounts and looking at the values of what you own, one of the most very, very common mistakes that people make, Justin, is they do just pop everything onto a spreadsheet and don't identify what the tax category that ⁓ asset falls in, right? And may not even accurately identify different kinds of retirement accounts. So it's really important to understand that some retirement accounts are pre-tax, which means you have not paid any tax on the dollars in those accounts. And then when you draw on them in retirement, they're going to be taxed as ordinary income. So like a traditional IRA is a good example, a traditional 401k, a pre-tax 401k. Then there are Roth assets. Roth assets are retirement assets that have already been taxed, but they are in an account where they are then growing tax free. So if you have a Roth asset that's worth $100,000 and you have a traditional IRA that's worth $100,000, when you draw on those assets, you're gonna be able to draw that full 100,000 out of that Roth, whereas in the traditional IRA, when you're drawing on that asset, you're going to pay taxes and you're gonna pay federal taxes and depending on the state that you're. you live in, might be paying state taxes as well, right? And so just as a simple example of pre-tax versus post-tax, let's say your effective tax rate, federal effective tax rate is 20 % and your state is 5%, that's gonna be 25 % reduction to the value of that pre-tax account when you're drawing those funds, right? So now we're looking at a pre-tax account that on an after-tax basis is worth something more like $75,000. and this Roth IRA is still worth that $100,000. So when we're looking at it on an after-tax basis, which is kind of as close as we can get in terms of apples to apples, it's important to understand that because on that spreadsheet, let's say you just have a bunch of accounts listed on the spreadsheet with the values of those accounts, those values are gonna look very similar on that spreadsheet. And real dollars in going to the grocery store and shopping, whatever, very different dollars, right? But the other things that we have to really be careful of and look very closely at are liquidity. know, one of the biggest mistakes that people make during the negotiations is not making sure that they're exiting the marriage with enough liquidity. When you're going through this transition, even if you stay in your same house, there's a lot of changes that are happening in your life. just, that's the nature of the process, right? There's cost associated with those changes. And if you don't have, like, let's say you keep the marital home as an example, and give up all of the liquid assets, all of a sudden, how are you gonna pay for maybe a roof problem or sitting here like needing to replace my air conditioner right now, right? ⁓ so considering these things ⁓ really important when we're figuring out what are the values of these different items. And one of the things you brought up, Justin, was social security. Now social security is not a divisible asset in a divorce. But it's important that people understand the rules around social security because it can be a big part of your retirement income picture. so for people who, where there is a significant difference in income between the spouses, this is really important to understand that if you are married to your spouse for a minimum of 10 years, 10 years, and you're not yet remarried, then you have ⁓ for the divorced spouse. social security benefit. That divorce spouse social security benefit could give you up to 50 % of your ex's social security benefit if 50 % of theirs is more than yours. So if your benefit's higher, you're gonna collect on your benefit, but if there's enough of an income discrepancy, then you are going to collect 50 % of their benefit. Now that is really, really important for a lot of people. And a lot of people say, well, what if he gets remarried? Or how does that impact his benefit? Doesn't, doesn't. It's important for you to know the rule for yourself so you know if you might be eligible for it in the future. Now of course, Social Security is a little bit of a moving target, so we always wanna keep abreast of these rules. But I think that's a really important one to understand. And it's one that comes up a lot when we're talking about spousal support later in life, right? We're looking at all the sources of income. Is spousal support part of the picture? How does Social Security play into that? And that's certainly something that's very commonly looked at with your other pensions as well, right? Now, the important thing to understand about dividing retirement accounts, any ERISA-governed retirement account, so a 401k, of the pension plans. they are going to require a quadro in order to divide them in such a way that you're not being taxed on the distribution of that account, right? What you want to do is move the retirement assets from one person's name into another person's name as part of your settlement. If that's the goal without having any tax burden, you're going to want to have a qualified domestic relations order quadro that gets filed. No. All kinds of issues come up with the quadro. So I think it's very, very important to get it drafted as soon as possible. One of the most common mistakes that I see, people reaching out to me five, 10, 15 years after their divorce saying, hey, this thing was never filed. Here's the thing that's really important to understand, Justin. If the 401k plan doesn't know that that account was divided in the course of the divorce and that your ex-spouse goes to roll that out, the money could have been moved, absolutely, if that never got filed. So that can be a very costly mistake. So it's important that if you do divide one of the aristle government plans, that you do have a quadro drafted, that quadro has to be signed off by the judge and then approved by the plan administrator. So the ⁓ 401k administrator, the pension administrator, they are gonna have their legal team review that document and make sure that's in accordance with their plan guidelines. All plans are not the same. They don't all have the same requirements. And so it's very important these things get kicked back all the time, justin the most interesting thing is I think the most common reason they back is because the plan name is incorrect. ⁓ So really need to pay attention to the details on these quadros because again, it can just add a lot of additional unnecessary expense if you're having to resubmit these things and your divorce is final and you're still fussing with this thing. So getting it done as soon as possible and making sure that it is in compliance with the plan's guidelines is just really critical. Justin: Yep. You know, and and timing is really important. Once the divorce decree has been issued, you should start, ⁓ doing on this list of things that you need to get done. I recently had a client who was two years out and they still hadn't, done the quadro and transferred the assets. And the longer you wait, the more complications that can happen. Let's Leah Hadley: Absolutely. have a case right now that I've actually been working on for years. It was a challenging case to settle to begin with, but then the parties were still fighting after the final conclusion. And so what happens is we have to keep going back and doing our financial analysis because the way they divided these assets, it's like a moving target for them. And again, all this cost could just be avoided by getting it done exactly like you're saying, as close to the final settlement as possible. Justin: Yep. And and you get to move on. Let's talk about updating ⁓ beneficiaries in ⁓ estate documents. How is this done and why is it so important? Leah Hadley: Well, beneficiaries are absolutely critical because they supersede your will. So a lot of times people have in their mind, well, I updated my will, so all my estate planning is done. That's a piece, right? But you always want to keep in mind the beneficiaries that are identified directly on your accounts, on your retirement accounts, on your life insurance policies. Maybe you have a POD on your bank accounts. All of those identifications supersede your will. So if you haven't updated those beneficiaries, it's still your ex, then that person could still potentially be the beneficiary of those things, right? of the things that comes up in cases a lot, especially when there are health issues involved, is to keep in mind that if you don't have any kind of a health care directive ⁓ in place for the states, your default is going to be your spouse, right? ⁓ if you don't want it to be your spouse, you may want to work with an attorney on that piece specifically earlier on to make sure ⁓ that somebody else would be making your healthcare decisions if necessary. Justin: Yeah. And it really doesn't take that much time, you know, a couple hours get it done, and then know that the money is going to the right people and the people you want to. ⁓ you hear these stories all the time of, ⁓ someone passing away and a life insurance policy goes to an ex-wife or an ex-girlfriend or not the person who it's intended to, which ⁓ is often current spouse, kids, etc. I want to talk a little bit more. More about the family home. So, you know, we we mentioned that if someone gets the family home, you could conceivably be house poor. Could you maybe talk about some of the other ⁓ things consider when you're trading, equity in the family home for maybe some 401k benefits or, ⁓ after tax shares or other assets, just things to think about. Leah Hadley: Yeah, this is a really tough issue right now. And it's so interesting because as long as I've been doing this work, the challenges of this issue have been different for over the years, right? So when I think about when I went through my own divorce in 2015, I want to say, we had bought our house in 2007. So right before the market peaked. And then, you know, the housing market fell out. So when we went through our divorce, our house was underwater. ⁓ It wasn't who gets the house. It was who stuck with the house and has to keep making this mortgage payment, right? Right now, a big challenge for people is there is amazing equity in houses, right? The real estate market has been strong for a long time. Some people still have these really, really low interest rates on their mortgages that it is unlikely we will ever see again, probably. And so they want to hold on to those interest rates, right? So we're seeing all kinds of things being negotiated around. Justin: Mm-hmm. Leah Hadley: the mortgage and the house specifically right now that I've honestly never seen in the time that I've been doing this work. But I think it's really important to understand what are you actually holding onto and what are you actually giving up, right? I think there is ⁓ a lot of recency bias. That's normal, right? But as it relates to real estate, the idea being that because we have been in such a strong housing market for so long, A lot of times people assume, if I need to sell my house, I can put it on the market and sell it within a month. Well, I've certainly had clients over the last couple of years starting to see less and less of that and starting to see houses sitting on the market for six months or a year or even 18 months to be able to get as much as they need to get out of those houses. And here's what happens. If you need access to that money. suddenly it's not as accessible as you thought it was, right? And for a lot of people, they're negotiating maybe I wanna retain the equity in the house versus a retirement asset, right? Well, I'll just sell the house in the future and get whatever I get for that. Realistically, what have we seen in terms of growth in real estate over time? About an average of a 5 % return. Over history, what have we seen in terms of stock market returns? An average of a 10 % return, right? So if you're keeping $500,000 of home equity $500,000 in retirement assets, one growing at an average 10 % and one growing at an average of 5%, and that asset that you're retaining doesn't have the liquidity, and you have cost to... maintain it, right? You have the utility costs, you have the just general maintaining your home and like I just said, I need to repair and fix or replace my air conditioning, right? So all of these things are considerations when you're deciding how to negotiate these assets. But for the vast majority of people, Justin, and this is just reality, most people get into a house they can barely afford the mortgage on together. Justin: Mm-hmm. Leah Hadley: So there they are getting into a house that they can barely afford together and then they're looking at dividing things up. people are not gonna be able to afford that same situation on their own. That's just reality. Justin: Yeah, and and I think that's a very fair reality. Let's move to the more positive and exciting part, which is rebuilding wealth, not just about surviving. So you have something called the intentional money method, and I know it runs through six pillars clarity, values, mindset, strategy, action, and support. Where does someone actually start the day after their divorce is filed? Leah Hadley: You just like we were talking about before, clarity is paramount. So many people are trying to make decisions without clarity, and that's what comes to bite them in the future, right? When we have clarity, we know what we're getting ourselves into when we're making a specific decision around our finances. many people are kind of making their financial decisions post-divorce ⁓ on their pre-divorce life circumstances. And I get it, that's the most easy or normal frame of reference, but everything has changed about your situation. And it's important to get really clear and realistic about what income looks like now, what are expenses gonna look like going forward. You might have to take on additional expenses. Maybe you need a little bit more help with the lawn or like, you know, other things that maybe your partner took care of in the past that you wanna actually build additional expense into your budget. You have to be aware of these things and be realistic. Justin: Yeah, the the be realistic one is really important. A lot of people want to kind of go back to how things were. And ⁓ that's not always the safest place, especially when it comes to relationships. You want to learn from what worked and what didn't work and to move on from Leah Hadley: Mm-hmm. Absolutely. Justin: In terms of wealth building moves, ⁓ there comes a point where the bleeding stops and you're starting to rebuild. in your experience, what are the most successful steps and order of operation to get there? Leah Hadley: You know, I like to think about building wealth as like, let's start with a really strong foundation. Life's gonna happen, divorce happens, people lose jobs, they get jobs, right? People die, people are born. Like things are going to change and we can withstand those changes much easier if we have a very solid, strong foundation. So first and foremost, is there high interest rate debt? If there is, how can we get rid of it, right? That high interest rate debt weighs people down for years. So you really wanna prioritize and be strategic. And people take on debt as part of the divorce process. Again, totally normal, but we wanna be very focused on if that's your situation, let's get rid of it, right? We wanna make sure, and this is important, even if you have debt, it is so important that you're rebuilding your savings. A lot of times people are using quite a bit of their savings through the divorce process. They might not have that good solid. emergency savings buffer that maybe they even started the process with. Other thing to keep in mind, I really encourage our clients to actually increase that amount of savings because now they don't have this other person that they can rely on if they do lose their job or they do have a health issue, right? Those insurance protections become even more important when you're single than when you're married. And so really looking at how can we make sure that we have good solid insurance protection in place We have that emergency savings, even again, even if you have debt, you're always gonna have to take on more debt if something comes up if you don't have any savings. So make sure you're prioritizing having at least some savings in place, even when you're paying off that high interest rate debt. But once you have that high interest rate debt eliminated, you have a solid savings in place, that's when you're really ready to start looking at, know, am I maximizing my retirement contributions? Am I doing? other things that I can do to really maximize the wealth building capacity. But again, we really want to start with that foundation and make sure that it's not shaky. Justin: There's one thing that I see often, ⁓ regardless of your net worth, and it drives me nuts, and I can't understand the psychology behind it, but it's a very easy fix. And you talked about high interest debt, and it's credit card debt. you have people who have, some money from their settlement, like big dollars in the bank, and they also have credit card debt. And they're paying 21%, ⁓ a number that can ⁓ rarely ever get out of they're earning three percent. ⁓ In their savings account. So I think it's so, so important for people to work with a financial professional to figure out how do I retire this high interest debt. And even if you don't have the money to pay it off right away, you can get consolidation loans. ⁓ you can do a loan on your house. There's lots of things you can do at a much lower rate ⁓ will free up hundreds of possibly thousands of dollars a month on your credit card. Expenses. So that's super important. your international money book is exactly the type of resource I wish ⁓ everyone walking out of divorce. In fact, they should be reading it before the divorce is even over. it's not a someday read, it's a must read now book. Where can people find your books? Leah Hadley: intentional. So you can find them on Amazon, Intentional Money and the Modern Woman's Guide to Building Wealth, Purpose and Peace. the one that is specifically divorce related is when just not working, a practical divorce guide for stay at home moms. Justin: Okay. And what about your podcast and your work? How do people connect with you? Leah Hadley: Absolutely. So Intentional Divorce Insights is my podcast. It is on all the different platforms, Spotify, iTunes. You can find it on our website, as well as all the other platforms out there. If you do listen to the podcast and you find it helpful, please do leave us a review so other people can find it as well. then the easiest way to connect with us, really, if you just kind of want to dip your toe in the water and see what it's like to work with us, is our Empowered Sisterhood Program. That is the membership program that I mentioned earlier. that is really about helping women to get clear around their money, to build confidence around their money. Don't have to be going through a divorce to be a member of that group, but we do have several women in the group who are going through a divorce, and it's just a wonderfully supportive environment. Justin: Yeah, and you have built an incredible community and so much knowledge that's very easy to understand and digest. gonna move to my favorite part of the show, which is ⁓ rapid fire questions. Ready? All right. Will I have to sell my house? Leah Hadley: Let's do it. Maybe. be realistic. Maybe. ⁓ Justin: Okay. ⁓ you know, may maybe give us a few points on ⁓ on yes versus no or maybe. Leah Hadley: Yeah, absolutely. So when you think about if you have to sell your house or not, you're looking at what is the overall marital estate? Is it in your best interest to retain the house as part of your division? Can you afford it? what are you giving up in order to maintain that house? Justin: Great answer. can my ex take half of my four hundred one K that I earn? Leah Hadley: So it's really important to remember that anything that's earned during the marriage, regardless of whose name it's in, is a marital asset unless you have a prenuptial agreement that says otherwise, right? And so if that 401k was earned during the marriage, it will be a consideration and it could potentially be divided. Justin: I never worked. Am I gonna be broke? Leah Hadley: You know, this is a good question, whether you worked or you didn't work, are you going to be broke, right? I think people make decisions about how finances get managed in a family. And for some people who never worked, they may find the challenge of having to enter the workforce. And there are some wonderful resources out there that can help people with that. But ⁓ certainly possible that you may or may not have enough income in order to be able to support yourself going forward. Justin: Yeah. How much does a divorce actually cost? Leah Hadley: this is a great question. I can tell you how to save money on a divorce, but the range is honestly wide, right? We see people doing great job of getting things documented and clear and are able to get their things settled for even $3,000 $4,000. And we see very complicated, high-conflict cases that cost hundreds of thousands of dollars in years to settle. I want to say the national average they print is something like, per spouse or something around there ⁓ an average, but it really varies widely. Justin: He hid money. Can any anyone find it? Leah Hadley: I think this is such a good question. know, when somebody moves money, and I get this question about cryptocurrency all the time as an example, it starts with cash dollars, right? That's where the money is going. It's coming from cash and getting moved. So yeah, forensic tracing, you'd be amazed at what we can trace. Keep in mind though, doesn't always mean the money still exists, right? Sometimes we find there's gambling habits or other things that the money may or may not still be there, but can it be traced? If necessary, I highly encourage ⁓ hiring a forensic accountant if it's needed. Justin: Last question I'm sixty two. Is it too late to get divorced? Leah Hadley: Oh, absolutely not. Oh my gosh. Actually, we've worked on divorces with people in their 80s. Now, I will say people do get pushback from their adult children a lot. But the fact of the matter is for some people at 62, you may have another 40 years of life ahead of you. Right. And so really owning the life that you want to have, I think that's a beautiful thing. Justin: Love how you answered that. Leah, thank you. This is a conversation I wish someone had handed me from the start of my divorce. The theme throughout everything you said is the same theme of this whole show. Divorce doesn't have to be the thing that breaks you financially or mentally. With the right knowledge and the right strategy and the right partners, it can be the moment you finally take full ownership of your money and your future. if this episode helped you, here's what I want you to do. Go get Leah's work. Her bestseller is when it's just not working. Her new book is intentional money, and her podcast is intentional divorce insights. ⁓ You can find her and her team at intentionalwealthpartners.co. Also, if this was helpful, please follow our show and forward it to anyone that you may who may find it useful. And if you want support on the whole transformation, not just the money, that's what we do at Reclaim and Reboot. You can find my books, U2.0, Divorce a Better Way Forward, and the U2.0 workbook, as well as a newly launched co-parenting playbook, all available on Amazon.com, Along with coaching information and a free 30-minute consultation over at www.reclaimandreboot.me. If this episode gave you one thing you can act on, please don't sit on it. Make it happen. Also share it with someone who may need it right now. We are building a community of people choosing transformation over trauma. Until next time, take care of yourself All right.