Latest / Go Big with Gib Podcast / Ep 63. Choosing the Right Spouse is Essential for Financial Success

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Ep 63. Choosing the Right Spouse is Essential for Financial Success · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Hey guys, and welcome to this episode of Go Big With Gibb.
• 0:12
  Speaker 1: I'm Gibb Irons, your host.
• 0:14
  Speaker 1: It's great to have you with us Today.
• 0:16
  Speaker 1: I want to talk about how choosing the right spouse is absolutely essential for your long-term financial freedom and success.
• 0:24
  Speaker 1: As many of you know, I've been a divorce attorney for over 20 years, and over the years I have seen exactly how a divorce can destroy a person's financial stability, and I wanted to share some really key insights with you about the impact of divorce on your financial situation.
• 0:43
  Speaker 1: So here are my three main takeaways from a divorce lawyer that's been practicing for 20 years.
• 0:48
  Speaker 1: Number one North Carolina, like most of the states in the United States, is an equitable distribution state, and what this means is that anything that you acquire from the date of marriage to the date of separation is presumptively marital.
• 1:01
  Speaker 1: Now, there's a few exceptions for things like gifts or an inheritance, but overall, the general theme is that anything acquired from the date of marriage to the date of separation is considered marital property and under North Carolina's equitable distribution laws, which is very similar to other states, equitable is generally presumed to be equal.
• 1:21
  Speaker 1: So the job of the court in an equitable distribution proceeding is to add up the net value of the marital estate.
• 1:29
  Speaker 1: So the court adds up all the assets and liabilities and comes up with one value, and it's the net value.
• 1:36
  Speaker 1: So, in other words, if you own real estate, we're taking the fair market value of that property and we're subtracting out any debt to get a net value.
• 1:46
  Speaker 1: So we're boiling every asset down to a net value and then we add it all up and divide it by two.
• 1:52
  Speaker 1: Probably the biggest mistake that you could make in terms of your financial planning is choosing the wrong partner.
• 1:58
  Speaker 1: I've got some tips about how to avoid doing that, but first let's talk a little bit more about divorce and the impacts of divorce on your financial situation.
• 2:08
  Speaker 1: In addition to equitable distribution, where you could essentially divide your net worth in half, in addition to equitable distribution, which could essentially divide your net worth in half, we also have child support and spousal support.
• 2:22
  Speaker 1: These payments are typically monthly recurring payments.
• 2:26
  Speaker 1: So if you have children with somebody, everybody knows that you're responsible for child support.
• 2:30
  Speaker 1: North Carolina, like many other states, has uniform child support guidelines that tell you how much child support you should pay, based on the number of children, based on the cost of health insurance, private school tuition, work-related child care.
• 2:47
  Speaker 1: The calculator takes into consideration all of those things, but if you've got a large child support payment or a large alimony payment, it's going to make it much more difficult for you to save and to continue to grow your investment portfolio.
• 3:01
  Speaker 1: That's another hindrance to your financial freedom.
• 3:05
  Speaker 1: The third, and probably one of the most impactful things about going through a divorce is the legal fees.
• 3:11
  Speaker 1: So everybody knows lawyer fees are very expensive.
• 3:15
  Speaker 1: But I went online this morning and I did a quick search and I found that the average cost for a contested divorce in the United States is between $15,000 and $20,000.
• 3:25
  Speaker 1: As a practicing family law attorney, I would say that that is probably fairly accurate in terms of the average cost of a contested divorce at our firm.
• 3:34
  Speaker 1: Now I will also say that if you have a custody issue or some sort of a major dispute over custody or really any plethora of issues, the fees could be significantly more than that, and we have clients every year that pay above $50,000 or even $100,000 in legal fees related to their divorce.
• 3:54
  Speaker 1: Avoiding legal fees is another thing that you should do to try to save money.
• 3:59
  Speaker 1: So really any litigation at all can have a negative impact on your financial situation.
• 4:05
  Speaker 1: But in the context of a divorce, attorney fees really can add up quickly and deplete your net worth quickly.
• 4:13
  Speaker 1: So for these reasons, I always tell folks my recommendation is to be slow to marry.
• 4:18
  Speaker 1: If you look at Gen Z, it seems like they've already caught on to this.
• 4:22
  Speaker 1: Most Gen Zers are focused on personal development and career development above getting married, and they're postponing their marriage until a later date when they're already financially secure.
• 4:33
  Speaker 1: I think that's a great approach to it and I would just tell folks you know, get to know your partner for several years, don't rush into marriage.
• 4:40
  Speaker 1: And then, most importantly, talk about finances.
• 4:44
  Speaker 1: Finances are a difficult thing to talk about, but you need to talk about a budget with your spouse, Create a budget, talk about your long-term and short-term financial goals.
• 4:54
  Speaker 1: If those goals do not align, then you are setting yourself up for failure and there is a lot of risk to getting married.
• 5:02
  Speaker 1: Although marriage is a wonderful thing when you have two loving spouses, even though starting a family can be extremely rewarding, there is a lot of risk in marriage, and so always keep in mind these things.
• 5:15
  Speaker 1: So, just going back through, the three main impacts of a divorce on your financial situation are equitable distribution, where you divide your marital property.
• 5:24
  Speaker 1: Family support in the form of child support and alimony and attorney fees.
• 5:30
  Speaker 1: If you are getting married and you have any reservations about these financial type issues, you may want to consider a prenuptial agreement, especially if you already have accumulated significant assets prior to the marriage.
• 5:43
  Speaker 1: And finally, if you see the writing on the wall and you know that you're headed to divorce, consider an amicable approach to divorce, even though you're still going to have to divide all of your property and deal with support issues.
• 5:55
  Speaker 1: Potentially, you can avoid spending tens of thousands of dollars in legal fees if you can approach the case in an amicable manner.
• 6:03
  Speaker 1: That could be through a separation agreement.
• 6:05
  Speaker 1: It could be through collaborative divorce, but there's a whole school of thought out there right now that if you loved each other enough to get married, you ought to be able to divorce each other with dignity and respect.
• 6:16
  Speaker 1: I always encourage folks to do that and save as much money as possible.
• 6:20
  Speaker 1: Thank you for joining us today and I look forward to seeing you next time.
• 6:24
  Speaker 1: Money as possible.
• 6:24
  Speaker 1: Thank you for joining us today and I look forward to seeing you next time.
• 6:28
  Speaker 1: Thank you for listening to this episode of Go Big with Gibb.
• 6:31
  Speaker 1: If you haven't already, go follow us on social media at Gibb Irons.
• 6:45
  Speaker 1: We'll see you next time.