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The Importance of Financial Literacy in Divorce · The Conscious Divorce

• Justin Milrad: There is a study that UBS has been running for years now, and one number in it has never left me. A majority of married women say their spouse handles the long-term financial decisions, investing, retirement, estate planning. And when UBS went and asked women who had already been through divorce or a death, ninety-eight percent of them said the same thing to the women coming up behind them. Get involved now before you have to. That's not a preference, that's a warning. And before anyone assumes this is a conversation about women, let me be clear. I've coached plenty of high-earning men who could tell you their exact finging schedule and had absolutely no idea what the family actually spends in a month, what the kids' activities are or cost. or where the life insurance policy is kept. Financial blindness is not a gender. It's a division of labor that felt deficient right up until the moment it became dangerous. And here's something that no one tells you. Divorce doesn't create your financial problem. Divorce performs an audit. It opens every drawer, pulls every statement, and puts your entire financial life on a table in front of a stranger. And whatever you didn't know is going to be revealed in the least forgiving room you'll ever sit in. So today we're going to make sure you're the one holding the flashlight. Welcome to the Conscious Divorce Podcast. I'm Justin Milrad. I'm a CDC certified divorce coach, financial planner, MBA, and the founder of Reclaim and Reboot Transformational Coaching. And the show exists for one reason. Divorce is not a crisis to survive. It is a transformation to execute. The people who come out on the other side stronger are not the people who got lucky. They're the people who got strategic and did their homework. Today we're doing something a little different, and I want to tell you why. Every divorce podcast eventually does a money episode. I've done plenty. And most of them are the same episode. Someone with three letters after their name tells you to build a budget, gather your documents, and understand your assets. And you nod because it's all true. And then you close the app and nothing changes. Because knowing what to do has never once been the bottleneck. the bottleneck is that it is four in the afternoon. You're already exhausted. There are 11 years of statements in a filing cabinet you've never opened and you don't know where to start. So I didn't bring you a theorist today. I brought you the person who opens that filing cabinet. My guest is Sherry Hersberg. Sherry is the founder and CEO of Divorce Source, right here in Atlanta, although she works all over the country. she spent about 28 years in operations, project management, and client services. She has an MBA. She is a registered neutral with the Georgia Office of Dispute Resolution. And she went through her own divorce, rebuilt her life as a single mom, and discovered that the skills she had used to run complex operations were exactly the skills many clients lacked when their marriage was coming apart. What she does now is unusual. She sits with people before, during, and after the divorce and actually gets stuff done. The discovery, the documents, the accounts, the systems, decree implementation that everyone assumes happens automatically. And that, I promise you, does not happen automatically. In fact, she helped one of my clients Someone who was running a business and really needed the support so he could focus on his role as a father and as a business owner. Sherry, welcome to the show. Shari Herzberg: Glad to be here. Thanks for inviting me to join you. Justin Milrad: Of course. Before we get into it, the standard and important housekeeping. I'm a certified divorce coach, I'm not an attorney, I'm not a therapist, and I'm not your financial advisor. Sherry is a divorce navigator and a registered neutral. She's not an attorney, not a financial advisor, and not a CPA, but she does have an MBA. And she works alongside those professionals rather than replacing them. Nothing either of us say today is legal advice. Tax advice, financial advice, or clinical advice. And nothing said here creates any kind of professional relationship or privilege. Today's episode is called Becoming Financially Literate Before, During, and After Divorce. We're gonna cover a lot of concepts today, and some of them may not make sense at first glance. That's okay. Trust me, you're not alone. Write them down, listen to the podcast again, do some Google searches, ask a professional who works in the space. Divorce law, tax law, and benefit rules vary by state and change over time. Anything specific to your situation should be reviewed by a licensed professional in your jurisdiction who can examine your actual documents. Treat what you hear today as education, a map of the terrain, not individual legal, tax, or financial advice. Then use that map to go build the right team around you. The team is critical. Sherry, let me start where you started. You had the divorce and you had the day after the divorce. Take me into that. What was the moment you realized that the legal process ending was not the same as things in your life being handled? Shari Herzberg: Well, I was the one in our home that managed the finances, paid the bills, money went to the financial advisor when we had a certain threshold and it got invested. We did have joint meetings with our financial advisors. You know, for me, what I do for people is not a direct response to where I was deficient. I acknowledge that going through divorce, if you're not organized and have serious clues about what's going on with your finances, you're really gonna have a difficult time. So I saw that opportunity with some friends and family members and it started there. and I started to sit with some friends and help guide them through this process. those of them that just weren't as organized really weren't as clued in and I realized that there's really a service here that people need some help with. But for me, you know, it was really business as usual. In fact, I ended up carrying less once I got divorced, I should say that. Justin Milrad: Sherry, you said to me before that your background in operations and project management suddenly had a whole new purpose. Can you unpack that for us? Because when I think people hear the word divorce, they think emotion, they think legal, they think conflict, they don't think project management. Can you talk about why they should be thinking project management? Shari Herzberg: Sure, because what is asked of you while you're going through a divorce is a list of tasks. They are answering dozens of questions from opposing counsel that aren't yes-no questions. they can be elaborate and ask plenty of detail. part of Discovery also is providing years of monthly statements. it's a list of tasks. It's a list of statements that you just check off once you've found them and uploaded them to your attorney. So these are direct tasks. There's a beginning, there's a middle, and there's an end. There are tasks that we that need to be accomplished from that as well. What is your budget? How are you? What are you spending every month? What are you going to ask for? All of these are projects. So that's my lens through it. Justin Milrad: I think what's so important is when people think of divorce, there's a start and there's an end. Now that's true about the operational part of divorce. Eventually you get a decree. But you really need to do a lot of long term planning. And that's really why really understanding your finances is important. And then of course there's the emotional part. And you have to make sure that as you're going through the divorce and as you're mediating and negotiating. You have to really think not just about yourself, but your kids, your future, you know, and have a long term, a medium term, and a short term perspective in mind. So let me give you my working definition and tell me where I'm wrong. I don't think financial literacy and divorce is about being good at math. I think it's about three things Shari Herzberg: Yeah. Justin Milrad: access, meaning you can see it, comprehension, meaning do you understand what you're looking at, and execution. Meaning you can actually make that thing happen. Most people fail at access and execution and they blame themselves for comprehension. Is that fair? Shari Herzberg: That's really fair. I come across a lot of people who know how many credit cards they use as a family, how many checking accounts, but they don't necessarily look at those statements. Their bills are on auto pay. At the end of the month, there's more money, so it's not really an issue, and no one lifts the hood because it isn't an issue. It's it's pretty much an autopilot. maybe there's some A little bit of extra work come tax time because you have to compile a few more documents, but for a lot of people they live on autopilot with one spouse maybe overseeing that with a little bit more detail, but another spouse may not be looking at it at all because they have other roles and responsibilities. Justin Milrad: You know, usually if your income is greater than your expenses, people really just don't pay attention. And you know, often sitting in this chair, and I'm sure you experience the same thing, is the people that you work with, number one, say, I just want to make sure I'm okay, but they also have no idea how much money they're making, what their expenses are. and that's can be a sobering fact. So let's go to the beginning. Someone's sitting in a marriage right now and they've not yet filed, they may not even have decided, but they know something's gonna happen. In your experience, what is the single most common financial blind spot at that stage? Not an exotic one, the boring universal one that shows up in almost every file when it lands on your desk. Shari Herzberg: I'd say the majority of the people I've come across do not sit down on a monthly or quarterly basis with their spouse to discuss their expenses, their finances. It's rare that it happens at all. so I think once you go through the divorce process, you are really learning every detail and it's shocking. People don't it's not about math, but it kind of is a little bit about math because you don't realize how much money is being spent in the various categories and that even some of the categories that even exist. So it really uncovers the details. Justin Milrad: different ages and stages. So how do people plan for things Shari Herzberg: That's it. Justin Milrad: like that? Shari Herzberg: I asked them to start opening their eyes, take a look, look in their wallet. How many credit cards do they have? Do they know where those statements are? Do they know how much is being spent on these credit cards? Where what are their credit cards being used for certain things and not others? What do they spend on travel? I'd say open your eyes and take a look. try and gather. At a minimum, a year of statements to take a look, even if you're looking at the year-end summary, that's a beginning. That's not sufficient enough when you're going through a divorce process. But as a first step, it's not a bad one. another step is running your own credit, seeing what is associated with your name, what loans are out there, what whether it's your mortgage, your car payment, maybe you don't have a car payment. What credit cards are out there, what accounts, that will help clue you in a bit in terms of the breadth of it. that's the beginning. If you if those statements are actually in a file cabinet, great. But many of us today, we don't get those in the mail anymore. We get them electronically. And it's a matter of: do you have access? Can you log into Amex? Can you log into Bank of America? Because really at this point that's how you're gonna do it. so it's starting there. If that really isn't an option. Where's the tax file? You signed something. is there a file at home in a drawer that says, you know, 2024 taxes, 2025 taxes, 2019 taxes? That really tells a lot. and looking through that or having a copy for yourself is all telling. but I think the awareness is number one, what's out there? and can you access it and if you can? start looking at it and familiarizing yourself. If it's appropriate for your scenario, can you start talking to your spouse about it? Hey, I want to know a little bit more. I know, you know, I'm responsible for these 10 things and you're responsible for these 10 things, but I really would like to know more I feel like that aspect of our lives is on autopilot. See how that question is responded to. Justin Milrad: So, you know, you and I have kind of talked about what are what are the documents to start. So, you know, if you were gonna take the next two weekends just to build a better picture, some of the things we talked about were collecting tax returns, W twos, ten ninety-nines, K1s, you know, twelve to twenty-four months of statements for every checking saving, brokerage and credit card account, retirement, four one K, four three Bs, IRAs, pensions, etcetera. Any sort of equity compensation, real estate, mortgage statements, home equity loans, insurance such as life insurance, any sort of estate documents. I think what's most interesting about all that is all this information will help you start planning the picture for what's called the marital balance sheet. And then of course, there's things like debt, loan documents, student loans, car loans, personal guarantees, anything co-signed. These are all Critical things. Now, Sherry, you mentioned earlier about pulling your own credit report from all the three bureaus. You know, I know there's freecreditreport.com. Why is this important? Shari Herzberg: You want to see what your name is attached to out there. are you aware of loans that your name is attached to? You may not. maybe you signed something you don't even know what you signed and you have a loan in your name. I think it's really important to see that. and again, it will show you what's out there with your name on it. I would say it's as important and telling as being able to access your tax return because a lot of what you just listed will be you know in that tax folder not everything but a lot of it should be there so it's a great place to start and I don't want people to feel overwhelmed you I'd say if you have an hour yes create accounts in all three bureaus if you have 15 minutes go to credit you know, you can go to Credit Karma and they'll pull that for you. You mentioned a site. You know, these are quick options for people to get a quick snapshot of what's out there. again, you're just dipping your toe just to understand the lay of the land. Justin Milrad: Yep. And the first step is getting started. Now I know you have a service line called the digital footprint, where you map the footprint. Can you explain to our listeners what that means and why it matters? Shari Herzberg: Sure. Today a lot of us are online with everything. You know, I just mentioned, you know, some of us receive our bills online. There's the obvious. We have photos that we share. We have find your friend. And typically we all know where the people in our family are at any given moment. We have some of us have ring doorbells or nest doorbells or cameras on the outside of our house, the inside of our house. The list goes on and on and on. And depending upon who you're divorcing and what the climate is, the digital footprint is more important or less important. again, you know, most people want are really care a lot about the photos or want the photos. But what else do you use electronics for, right? If you're getting divorced. Do you want your soon to be former spouse to see everybody walking into your home? Not that you're hiding it everything, but do you have access to your Soon T B ex's nest doorbell? I just think privacy becomes pretty important at this time and it's important to identify what's out there that someone could be tracking you and using against you. Again, if this is amicable, it's really not a big deal, but for many people I speak with, it's not amicable and this information can be used against them no matter how innocent it is. So it's really buttoning yourself up to understand how you create your boundaries. Justin Milrad: You know, I think a important area also is what not to do. And I want to be very direct because this is where I see smart people torch their own credibility by doing something stupid. Someone's scared, they Shari Herzberg: Yes. Justin Milrad: can see this coming, and their instinct is to protect themselves. They start moving money, they delete things, they open an account in their spouse's name, you know, that they don't know about. They pull cash out. Can you let our listeners know what happens in these cases? Shari Herzberg: I'm gonna say two words, forensic accountant. And for those of you who don't know what that means, you're probably familiar with the term accountant. But sometimes forensic accountants are part of a divorce, and what they do is they track the money, where the money has come into and where it goes out from. And it is not cool and possibly not legal to start moving money around. Months before you're about to get divorced. It's just not okay. people do it. You may, you may not get caught. If someone has suspicion that there's more, you know, you're gonna be reviewing statements for at least a year. And if the math's not mathing, you might need to bring an expert in to help you understand what's going on. I highly recommend against it, against moving money. when people have those thoughts, I am very direct with them and say, you know. You have a great career, you're able to make money. Yes. Are you gonna end up with a little less at the end of this divorce? Yes, but you've got a great skill set, you have a great career, and you're gonna make it again. You're gonna make your money again. Do not think about unethically and illegally moving money now. It's gonna bite you in the butt. So Justin Milrad: Yeah. You know, and it just Shari Herzberg: I'm a fan. Justin Milrad: doesn't look good. You may have done everything else right, but if you're kind of caught and the spotlight's on you for doing something dumb, it can really blow your case. And, you know, sometimes your case could go in front of a jury, other times it goes in front of a judge, and they really don't look at such cases in a positive light. Shari Herzberg: If you're caught, you shoot yourself in the foot. your attorney will may not fully trust you, 'cause chances are you kept that from your attorney and this is your biggest advocate, if this is brought to the judge's attention, it just doesn't look good. You have one chance to make a first impression and you've just shot it. So Justin Milrad: Yep. Amen. I want to pause for sixty seconds and ask you for something because we're about to get into the part of the episode that will save some of your real money. If this show has ever given you a piece of language you needed or a framework that made a hard week make sense, do two things right now. First, hit follow. Follow costs you nothing, and it's the entire reason the show reaches the person who needs it next week. Second, and this is the one that actually matters most. Share this specific episode with one person. And I want to be precise about who. Don't share it with the person going through the loudest divorce. Share it with a quiet one. The friend who says everything is fine in a voice that says it's not. The colleague who stopped talking about their weekend. The sister-in-law who's never once mentioned money. that person is 30 seconds and one tap away from being a piece of information that could change what the next five years of their financial life looks like. And they'll never go looking for it themselves. You are the reason they find it, send it, then come back because Sherry and I have something to tell you about why a hundred thousand dollars is not necessarily always a hundred thousand dollars. Here's the single most expensive misunderstanding in divorce. And I want to state it plainly so people can hear it. Two assets on a spreadsheet can both say $100,000 and be worth completely different amounts to the person who takes them. Every asset has three numbers: what it's worth, what it costs you to convert to cash, which is mostly taxes and service fees, and whether you can actually get at it. Share you sit with people looking at spreadsheets. Does the after tax reality land or do they negotiate off the gross number? Shari Herzberg: It the tax part doesn't land. they typically negotiate off of the number on the spreadsheet. I do know that attorneys try to enlighten them, talking pre-tax, post-tax, retirement, non-retirement. And because of the state of mind most people are in while getting divorced, this just goes right over their head. So this is something that needs to be heard over and over for it to stick. because right now you are going through a process you've never been through before, so it's all new. You don't know necessarily what to expect in the coming months. You're told, but you don't because you haven't gone through it, you don't really know what it means. So you're on like a heightened awareness often, if not at all times, trying to get through this and survive. So this can seem to someone as something esoteric and it's not. It's really important. And we're gonna dive into a little bit shortly. And also Justin has put together a really great graphic that he'll share at some point and tell you where you can access it. Justin Milrad: Yep, I'll put the graphic in the show notes. And, you know, one of the reasons why we do this podcast is we want you to have the tools to ask better questions. So $100,000 of retirement may not be the same value dollar for dollar is $100,000 in cash. But you also have to look at your global position and your timing. You know, if retirement If you're really close to retirement, that may be more valuable to you. If you're further away from retirement, it may not be. So these are things that you need to really think about and discuss with your attorney and your financial advisors and coaches and everyone that's qualified to give you advice. So let's talk about the house, because this is often the hardest one. In my coaching practice, this is the single most emotionally loaded asset, and I would argue the most commonly overweight. You've watched people fight to keep the house. What happens to them and what should they be thinking about? Shari Herzberg: Well, I think the first thought is there marital debt? And this might be new information for you if you haven't been following along in your family's finances. But if you have marital debt, typically the house needs to be sold to cover the debt. Unless someone's signing up to take care of the debt another way. If you are fortunate enough to have no debt or no bad debt, because House is a good debt. If you have a mortgage, that's good debt. But credit card debt, outstanding loans, that's not such great debt. But let's just say you don't have to sell the house to cover bad debt. There's a decision to be made. Does one party want it? Does the other party want it? And if the party who wants it, can they afford it in their new life post-divorce? And I can't say that enough. People are really connected to their home. They've put their blood, sweat, and tears and making it feel just so it's where their family has grown up, it's where the memories are. And that's all to be respected and acknowledged. But at the end of the day, with your new budget, are you going to be able to to take this over? People tend to ignore. what their attorney tells them. I've I've been in the same room, I've seen it over and over. They're super focused on, I want to keep the house, I want to keep the house. And the attorney over and over is saying, you really can't afford it. You can't afford it. You can't afford it. Let's move on. So one is please listen to your your attorney. They know what they're talking about. This is what they do for a living. They can read a marital balance sheet pretty well. They've looked at your your DERFA, they know what your running costs are. They know what the running costs are of this house, and they can do quick math and let you know whether it's gonna work or not. work on this issue that, you really might need to let go of the house. Maybe Justin has, you know, some fantastic, wonderful idea of how you can make the house work without impacting other aspects of the balance sheet, but it's something you really need to take a close look at because it is typically in a typical marriage the biggest asset. Justin Milrad: You know, speaking from my own personal experience, I was shopping with my real estate agent because my ex got our marital house, and she kept saying to me, You don't want to be house poor, you don't want to be house poor, you don't want to ho be house poor. And emotionally, I wanted my house to be comparable to the other house, so my kids had a similar experience. And that's what I bought. And in hindsight, I wish I didn't do that because every month I have to really think about how I'm gonna make the payment. And then another thing to consider is my old house was financed at three and a half percent. My new house is financed at six and a half percent. So there's a significant difference. So as you're going through negotiation, you wanna know if the current mortgage can be transferred, you know, to whomever gets the house if you keep it. The other thing I want to You to think about is always ask yourself the question: what are my tax obligations if I get this asset? So a house has $250,000 per person, a lifetime, it's actually the person, not the house, exemption and capital gains. So when you're married, it's worth half a million dollars. If you're not married, it's worth $250,000, assuming you haven't used it. So, you know, I recently worked with a client. They've owned their house for like 30 something years. It's gone up almost a million dollars. And, you know, his his soon to be ex wanted to keep it and they were on good terms. And I said, Well, if that's the case, just know that, you know, you're transferring a huge capital gain to her. So that's something that, you know, you may want to talk about, which I thought was pretty important. Shari Herzberg: Now, for some people, you know, what Justin just said is maybe a little too technical. You need to take that step by step. But it's not just someone signing over the house to you. There are many steps, there are many processes. It's it's not just the work that goes into taking the house over. He's he said it really clearly. It's what are the financial implications? And that is a conversation I'm not sure I think your attorney could probably have a really quick one with you about, but I would go to your CPA or your financial planner. if you're lucky enough to have Justin as your coach, he could have that conversation with you. But don't overlook it because at the end of those numbers and Justin, maybe we could put together something for the listeners. to see, you know, just breaking down the numbers that you were just discussing. And we could have two streams of it and we can compare just what it looks like, what that house, what the value really will be once it's in your possession. it might be just fine, but it's good to know going in what the bottom numbers are going to be. Justin Milrad: You know, being pound wise and penny foolish, it's something that's really important, you know, to think about. Sherry and I were talking before we went live today about some of the people that you can't afford to not have on your team. And yes, getting a divorce is expensive, but you also, if you're talking about a large asset and it may cost you, you know, a few thousand dollars, that is someone that you should be hiring because it could save you. A lot more over the long run, and you're going to make better decisions. these people are professionals for a reason, and you want to make sure you use them for their highest and best use. Let's talk about the retirement Shari Herzberg: Agreed. Justin Milrad: and the QDRO, also known as a quadro. Now that one scares people and it should. Retirement accounts. This is where I see the most expensive, unforced errors, and they're all preventable. Sherry, when you're working discovery and post-decree implementation, what goes wrong with retirement? Shari Herzberg: Well, first of all, just getting 401k information is not the easiest thing to begin with. That just obtaining the information is challenging. There are many very technical steps in splitting a 401k. Every divorce decree I've read states that there is a specific person being tagged to to facilitate this for you. And that's because Number one, this process takes a long time, even if you know what you're doing. it's very specific. So if you want to try it on your own, go for it. But like three months down the road, you're gonna realize you have made several mistakes, so it can't be processed and you've just wasted three months. so I highly recommend that you hire the person your attorney recommended because this is what they do day in and day out. One thing I recently learned about retirement is I was in a mediation and the mediator looked at retirement accounts and said, okay, this is the amount that you are eligible to receive. let's just, you know, this fund and this fund equal that amount. I'm gonna yeah, I'm just gonna assign them to you, right? Not a great idea. Yes, it's less work. But different funds appreciate differently than others, have different rules than others, and you don't know until you know. And it is not the greatest surprise. So I'm a big fan of taking each fund and splitting it in half, unless you know for certainty that fund A and Fund B are. Pretty equal in the way they're invested and the way you can pull out the money when it's time. again, something very detailed, very nuanced, and I just say go 50-50, split it, split each fund. let's just say it's 6040, that's not uncommon. 6040 down the list of every single fund. Justin Milrad: Think that's really smart, especially when we're talking about taxes. So, you know, I mentioned capital gains and I want to explain what a capital gain is. So you buy, let's say, stock, let's say you buy Google and it's $100 a share. And you buy it, you know, 10 years ago and now it's worth $300 a share. Well, the difference between what you pay to purchase it and what you sell it at, in this particular case, is $200 per share. So that's what's called a capital gain. It's a long-term capital gain because it's held for over a year. So you're taxed on that. So with what Sherry just recommended, when you're splitting stuff 50-50, you split the upside and you split the downside. You make sure that the tax obligations are equitable. And that's why I think it's such a good idea to do what what you just said. And believe it or not, some mediators and some You know, attorneys won't give you this information. They just want to move quickly. And they have this thing called the marital balance sheet. And it's a game of chess and they move stuff here to here to here, but they don't always think of the whole global picture. I want to talk about cash flow. So cash flow is really your ability, you know, to pay your bills, to make investments, to, you know, it's your money coming in. and the tax code has changed quite a bit for people. You know, in terms of child support and alimony. So Sherry, can you kind of talk about the importance of cash flow considerations when you're negotiating? Shari Herzberg: Sure. I think it's important to ask really basic questions. And again, because you likely haven't been divorced before, you don't have these answers. But but it's does child support get taxed? Does the person providing the child support get to deduct it? Is alimony taxed? Can you deduct alimony? These are important questions because if the answer is yes, there's less money than you think you're getting right off the bat. If you've identified you need twenty thousand dollars a month and that's what you've negotiated, have you thought about the tax portion of that? Because come April 15th, you need to pay taxes, and you may not have figured that in. So again, you know, you're not expected to know these things because you've never been here before. You're not you you may not even think about these things, which is why. I can't reiterate enough that once you have what you think is a final marital balance sheet, go talk with your CPA and go talk to your financial advisor and just say, talk to me like I'm a fifth grader because I've never really looked at this before and I don't really know what these numbers mean other than the number that's sitting there and whether it's an asset. Or it's something we owe. take your time, take a deep breath, just hit the pause button. There's no rush because you don't want to make simple mistakes. And for you it's not simple because this is not your world. But a tax advisor, this is a simple conversation for them and they can lay it out for you pretty clearly. Justin Milrad: So I just want to put into perspective how often taxes aren't discussed. So, Sherry, from where you sit, can you put in a percentage how often a client is actually running the after tax math on their settlement? Right. Shari Herzberg: Never. Never. Justin Milrad: it's almost never. And that's mind blowing. you know, but again, another reason why you want to involve a CPA or CDFA, you know, or Sherry or me. in the discussion so that you ask better questions. Let's talk about a Shari Herzberg: Actually, though, let me just jump back for one quick sec. I do have a client who's a widow who I've helped go from you know not being responsible for the the money in the house. I mean she had plenty of responsibilities, she has five kids, she was believe me, she was busy. Paying the bills was not a responsibility. Sadly, her spouse passed away and now she's you know she has all the responsibility. Fortunately, all her kids are grown. At the end of the day, she doesn't know what she's spending. So we have spent several months going through transaction by transaction, categorizing. She's got a great understanding of what she's spending, and we have had the tax conversation because at some point she needs to know what she's going to be taking from the estate ongoing. And just looking at what she spends is not sufficient. And we were all aware of that and it's a bigger conversation. So it's not just, you know, I need twenty thousand dollars a month and in the end I'm gonna have to pay, you know, twenty thousand dollars a year for tax. It's not like that. It's not one plus one equals two. Because if you're gonna get more money, you need even more money for the taxes. So it's it's an interesting equation and it's not one plus one equals two. Again, you don't need to understand that right now. Just take a note and know you need to look at it when the time is right. Justin Milrad: Let's talk about debt now. So your divorce decree doesn't bind your creditors. Your creditors were not in the courtroom. They were never parties to your marriage or your divorce. If your name is on that loan, a judge telling your ex to pay it doesn't remove you from the contract. If your ex pays late, that late payment lands on your credit report. If your ex files for bankruptcy, your hold harmless clause may be worth very little. The only real protection is refinance, assume, close or pay off. Sherry, how many people learn this a hard way and what sort of advice do you give them so that when they're negotiating a settlement, they don't get stuck with an ongoing obligation that their, you know, former spouse should have paid off? Shari Herzberg: Well, one of the steps in discovery often is to provide a credit report, which is what we talked about, I don't know, twenty minutes ago or so. Pull one on yourself, see where your name is and question what is not familiar so that you understand. And this is where you have a conversation with your attorney and insist that your name be off of these items. And maybe that means having to sell the house. But you want to get out from under that because your credit can be ruined. There are situations that go sideways that you didn't see coming. So again, I know people who are listening, their brain might be hurting. And I and all of divorce can be a headache because it's there's so much new information coming at you at a time where you're just not at your peak performance. So again, take lots of breaths, take your time. Seek out the right people and ask good questions. but someone can ruin your someone can ruin your credit. You know, some people make funny shady deals and it's like, look, we're not gonna refinance, but I'm just gonna I'm just gonna pay the mortgage. Well, what if that person doesn't pay the mortgage? Your name is there, your credit is going to get affected. So It's important. Justin Milrad: and I think it's also important to note that it's not always shady dealing. Sometimes life events happen. People get sick, people lose jobs, people have other things in their life that they prioritize over paying off a debt. So the sooner you can extinguish it, you know, make sure that in your mediation that you have the opportunities to transfer all risk to the other party wherever you can. All right, so let's move now to after divorce when there's a decree and a to-do list. So the judge signs, everyone exhales, it's over. The attorney closes the file and sends a final invoice. And in my experience, that's the exact moment that the most expensive phase begins because everyone thinks it over. Sherry, walk me through what actually has to happen in the next 90 days. that very few people Shari Herzberg: Sure. Justin Milrad: get warned about. Shari Herzberg: I'm smiling because at the beginning of your divorce, you just can't wait for it to be over. You just can't wait. But because you haven't been through it, you don't necessarily know the to-do list that's waiting for you at the end of the divorce. Typically, once you've mediated or had the judge decide what is getting split, there is there are a lot of tasks that need to happen typically within 90 days. And God bless the attorneys. they write this document in 20 to 60 pages. It's pure legal ease. It's beautifully written. But you need to read sentence by sentence to understand what is the task. So you talked about project management. what I do for my clients is I read line by line, I start a spreadsheet, and I write what the task is, where is this task located, what page of settlement agreement who's involved there there could be four people involved in a specific task is and so it's identifying who's involved and when i say people it's often financial organizations because you're moving assets from one place to another it could be you it could be your spouse who's responsible for this task when is it due does it repeat what's the frequency right so going through at a minimum of 20 pages of that is it's quite overwhelming. You thought you've read your last documents, but you haven't. But it's so important because it's not only closing certain things and dividing the assets, but if you have children, there are ongoing instructions here of what does your custody look like? How are you sharing expenses? There are very specific time frames. regarding shared expenses. You have to you know it'll say you need to provide a copy of the receipt. It could say you have you know 30 days from the time the receipt was created to submit it for reimbursement and then the other spouse has a certain amount of time to reimburse you. There are a lot of moving parts. back 17, 18 years ago when I got divorced, I had a spreadsheet. Again, this was my skill set. so it wasn't a really big deal for me. But today there are great apps, like Our Family Wizard is one of them. they help mo log and monitor these expenses. They they've made it a lot easier. So again, it's it's a slog at the end, and you are you know, you're exhausted and you think you're done, but this is really one of the most important steps. I have seen too many people leave tens of thousands of dollars on the table yearly and they can't go back and get it because there are time frames. You have 30 days potentially. So exhale, take a weekend, take a week, but this document's incredibly important and it needs to be gone through. And you need to understand what you're responsible for. Justin Milrad: Can you talk a little bit about rebuilding? So, you know, often each spouse has a responsibility. One person typically manages paying the bills, one may be doing budgets, one may be managing, you know, kid activities. But when you're rebuilding in the first 90 days, and let's say you moved into a new household, what sort of financial literacy does this person need to know? And what are some of the major tasks that need to happen? Shari Herzberg: Well, I think here you need to crawl before you can walk and then run. And this at the beginning is basic math. You are receiving, you potentially go to work and you have a paycheck. You know what that, what your take home is there. You potentially are could be getting child support. You might be getting alimony. There's a finite number you are getting. You want to make sure that your monthly expenses do not exceed that. At the beginning, it might be really scary because you haven't done this maybe since college. balancing your own checkbook, which you know, we all do very differently today. and I'd say take it step by step and if you are scared and need help, ask for help. And that's what I do for people. You know, if you're comfortable asking your best friend, go for it. If you're comfortable, you know, asking your friends. spouse because that's what they specialize in it, don't be ashamed. You had a really important responsibility in the marriage and this just wasn't it. And if you put your head under the pillow, nothing's gonna be gained. It will only be lost. So give yourself grace and ask for help and take one step at a time. It's amazing to see how far you can come just taking one step at a time. Justin Milrad: I think that's great advice. you know, people get divorced at different ages. And I think one of the surprises that people don't really think about is social security. And if you've been married for over 10 years to that one person, there's a possibility that you can claim a benefit on your ex-pouse's earnings, which you should use in your own budget. Typically, how have you worked with clients to figure out if this is possible. you know, sometimes there's pensions. You know, how do you help support your clients in these areas? Shari Herzberg: Hopefully, as part of discovery, there is a statement from Social Security that you can gleam off of to get a sense. but this too, I'm not gonna say it's it, there's a separate expert for this, but it's a conversation again with your CPA or Justin. to understand, well, what does this really mean? When can I take it? What happens if I take it at 62? Does it matter how old my spouse is? Does it matter my former spouse? Does it matter if They take it, there's some variable scenarios, and it's not brain surgery, the social security aspect. I think there are in terms of divorce and the complexities, this one's pretty straightforward. There's like three categories, three things to think about, and just and you know what you can do, and then you discuss it with your financial person and to say, okay, well, it looks like I'm eligible. At this age, it looks like I'm eligible for this amount. What do we think is best for me? Again, you're not supposed to have all the answers. You just need to know who to ask who the answers of. You know, one other aspect of that is that you might not need to take the Social Security, but can your financial advisor do better with that money monthly? If you can be diligent enough to take it and not spend it and invest it, that's a conversation. Can you do better than the government? Do you want to have control over that money instead of the government? Again, a conversation with your financial person. Justin Milrad: Yeah. You know, and I do want to touch briefly on pensions. some people have pensions, and sometimes a pension can be worth a lot of money, sometimes not just tens of thousands, sometimes hundreds of thousands of dollars. So if there is a pension and people are, you know, take their pensions very personally, it is worth hiring an expert in many cases to find out what the discounted rate. of the pension would be, should use it as a negotiation tool. Any any thoughts on pensions? Shari Herzberg: No, I really haven't come across them in my dealings. And again, I'd go to your CPA because I bet if your CPA can't answer those questions, he's got a person for sure. Justin Milrad: Yep, for sure. All right. So we are going to switch over to my favorite part of every podcast, which is rapid fire questions, quick answers. You ready? Shari Herzberg: Yeah. Justin Milrad: the single most common thing people forget to do after a decree is signed. Shari Herzberg: I'd say it's two things. One is actually read it and make notes of what needs to get done. And I said, here's one thing that slips through the cracks. I've seen this a few times, is that your car where on your birthday who's getting the the request to have your car inspected and get a new tag in the back? I've seen that happen to some incredibly brilliant people and they get pulled over with the kid in the back and they have no idea what the heck's going on. It just completely was not in their realm. It's not a big deal. It's a little embarrassing, but Divorce is hitting the reset button and it's it's readulting one one every aspect of your life. Justin Milrad: No doubt. The documents most people the documents people are most likely to not have. Shari Herzberg: They're taxes. They don't know where the taxes are. They don't know where any of the statements are. Justin Milrad: The assets people Shari Herzberg: Yeah it's Justin Milrad: most often overvalue. Shari Herzberg: Their house. Justin Milrad: The assets people most often undervalue. Shari Herzberg: Retirement accounts. Justin Milrad: One thing you tell someone to do this week if they think divorce is coming and they've told absolutely no one but you. Shari Herzberg: Let's start to get the ducks in a row. Let's try and access some statements. Let's get Justin Milrad: Get your house in order. Shari Herzberg: some get your house in order and you can Google that and you will get a list of what what documents to grab or try and locate. Justin Milrad: Complete the sentence. The decree is not the finish line, it's the Shari Herzberg: the beginning. Justin Milrad: Your problem solving motto is do not react, respond. Where did that come from and what does it mean in the middle of a divorce? Shari Herzberg: So divorce, you know, I mentioned earlier, ninety-five percent emotion, five percent law. Emotions are running high. Don't get triggered. Do your best to not get triggered. Take a breath. And I will say this very specifically when it comes to receiving an email or a text. Take a breath. When you're going through divorce, decide what time of the day will you no longer be looking at emails or texts, no matter who it's from. Obviously, your kids is another story, but if it's 5 p.m., are you going to read this email from your attorney or are you going wait in the morning? There's an email from your Sin to B ex. Are you going to read that email at 5 p.m. or are you going to wait in the morning? So one is it's choosing the time, then you read it, you can feel in your body that you might have a reaction. Don't respond when you're reacting. Get some space from it. Think about it you know, not when you're triggered, and you'll have a better answer. It'll be a better response. It could be a just a better dialogue, just taking a breather and not responding in the heat of the moment. Justin Milrad: Boundaries, boundaries, boundaries. Shari Herzberg: Boundaries. Justin Milrad: It's time to wrap up. Sherry, if someone feels like you're exactly the person they need right now, tell us who you help, how you can help them, and where they can connect with you. Shari Herzberg: Sure. I help people at all phases of divorce, pre, during, and post. it doesn't matter what you do for a living, it doesn't matter what your skill set is, it doesn't matter what roles and responsibilities you've had, I will walk down this path with you to get the stuff done. If I can't handle it, I will definitely point you in the direction to get. additional help. you can contact me via my website. It's divorce hyphensource.com. I'm on Facebook, I'm on Instagram, on I'm on LinkedIn. No judgment. Let's just walk through it and get it done. So you can move on to your the next phase of your life. Justin Milrad: And I'll put all that information into the show notes so you don't have to write it down while you're still driving. Sherry, I want to thank you. And I do want to reiterate, you know, one one of our clients, mutual clients, worked with Sherry and said there's no way he could have gotten through this divorce as quickly as he did without her help. So this is an episode that I've wanted to do with you for a long time. So I'm glad that we finally got a chance to do it. and I know how important you are, especially for busy professionals living all over the country to help get them organized, see the big picture, talk some sense, you know, into how to best use their professionals and move forward onto their post divorce life, which by the way, can be spectacular. Shari Herzberg: Absolutely. Justin Milrad: Here's what I want you to take from this episode. You are not bad with money, you are kept away from it, or you handed it away, or you were simply b building a busy life and someone else picked up that job. None of that is a character flaw, but none of it is going to save you either, because the audit is coming whether you're prepared for it or not. Financial literacy and divorce is not an aptitude. It's a decision. It's deciding to open the drawer. It's deciding to read the return. It's deciding to ask. what the after tax number is, even when you feel embarrassed for not knowing. And every single one of those decisions is available to you today for free, right now, before anyone files anything. Reclaim, reboot, become. That's what reclaim and reboot actually looks like. When it stops being a word and starts being a Saturday morning with the filing cabin. If you want to go deeper, everything I do lives at www.reclaimandreboot.me. That's where you will find my books, including U 2.0 Divorce, a Better Way Forward, the U2.0 Workbook, and the Co-Parenting Playbook. And if you just want to talk about your own situation, I offer a free 30-minute consultation. No pitch, no pressure, just a conversation about where you are and what the next right move looks like. If this episode helped, follow the show and send it to the person you thought about while you were listening. You know who they are. I'm Justin Norad. This has been the Conscious Divorce Podcast. Take care of yourself, and I'll see you next week.