Protecting Your Wealth Before, During, and After Divorce ft Jason Porter, P.A.

Video Chapters & Transcript:

Well, hello folks and welcome to yet a special edition of Smarter Money Matters. It really does. We have the special guest of course of your wealth doctor Jeff Kamarta along with super CFP Anna Wonderlick and my good friend and topshelf lawyer Jason Porter is here to give us some deep insight on managing potential divorce situations to maintain wealth in the family and and present the lowest amount of disruption possible. Rule number one is don’t get divorced, Jeff. So, so wanted I guess you know you probably have some kind of a checklist or an algorithm. What would you say the first rule of divorce is aside from not getting divorced, right? Uh the first is to have a a good handle on your assets. Uh you need to know what you have, where it is. Uh you need current valuations for whatever the particular investment might be. Um, it’s good to have everything in some sort of paper or digital format so that when you go in to have that initial consultation, you can say to the lawyer, this is what we have. So, so these are folks that kind of on a doorstep of divorce and they’re in the legal consultative process and you want to make sure that you’re well informed so assets kind of don’t disappear. Is that right? Absolutely. And your lawyer can only help you as much as to the degree that they have information, right? If if something’s left out, there’s then it’s left out for the lawyer, too. So, what’s a typical checklist? Say that, you know, god forbid, you know, Anna darkens your door, you know, with a a tale of woe to tell. What questions would you be asking her about, you know, what her asset structure is to make sure nothing is missed? I would say, Anna, first tell me about your real property. Do you uh own your home? Do you have investment properties? Anything that is landbased? That’s real property. We need to know about that to start. Okay. Then I would want to know uh how much cash do you have on hand? Uh what’s in your checking account? What’s in your savings account? What’s in your retirement accounts? What types of retirement accounts do you have? Um I want to know about the investment account. I want to know everywhere that Anna’s investments are. Uh because as you know, folks have investments all over the place. Uh and especially if we’re talking about a great divorce, which is the long-term marriage. Uh assets have accumulated over time. You notice he was looking at me when he said, “Uh people have changed employers. Sometimes that means their retirement money’s over here in the past. There’s a new retirement account. Those types of things. And all of those things have to be accounted for. Um, to some degree, personal property can play into the equation. You mean like cars and motorcycles and lawns, jewelry? I’m thinking more like uh when Anna talks about jewelry, that’s kind of what I had in mind because some of that I would think some things are more valuable than others. You had it, right? So more some things are more valuable than others. Some things that are personal property will appreciate whereas some things you know cars they’re not appreciating those types of things typically. True. Typically good point. So I guess what about husband’s property? Let’s say the del because that’s a bit of a gray area. Um so I’m guessing and when you say real property obviously mean real estate, houses, rentals, rent, that kind of stuff. So uh um say that Anna and her husband uh bought a house, an investment property, but for convenience, the husband closed in and adjusting his name, but they bought it after they got married. What about that? Anything that is purchased during the marriage uh except for limited circumstances is going to be considered marital property whether her name is on it or not. Correct. Whether her name is on it or not. And now there are some limited circumstances. Let me explain one of those. Let’s say that the husband uh has a trust that was left to him by a parent or a grandparent and he takes money from that trust that he never co-mingled with the marital finances and the money flows from that trust into that piece of property in his name. then that’s going to be where the lawyer makes his or her money because that is going to be a a question of law and it’s going to be heavily litigated. So, let me let me make sure I’m following you. So, um that for for the sake of say I’m the husband and I have a trust and I I get some money and then I take it out of the trust, right, and buy a piece of property. If I put it just in my name, am I still protected? You are. I would say maybe. And if I put it in joint names, then what happens? If if Okay. So if it’s in the joint name, Jeff, then at that point it’s coingled. Okay. So then it’s clear that Anna has a claim to it. If it’s not co-mingled and the property is only in the husband’s name, then at that point, the husband’s going to say, “It’s mine. It was never coingled.” Hannah’s going to say, “Well, we were married and it’s still half mine.” And that’s going to be an issue that gets litigated. Um but but if she’s you know um if she’s being machavelli you know on the purchase well honey I could take care of the bills and everything else and sign for it so why don’t you put it in both names and at that instant half of it hurts right correct important planning point from all perspectives that’s something not to lose sight of guys it really really is and the key language is co-mingled that’s the language that the law uses when it looks at marital finances um Anything that is uh that predates the marriage and is not mixed in or co-mingled is typically outside of the divorce proceedings, right? So that if I’m, you know, bright boy that I’d like to be, if I say, you know what, I think I better buy that that that land in the trust, whether I’m the trustee or not, does that give me more protection? Absolutely. Absolutely. And and for a lot of our clients out there that are thinking about maybe protecting their kids as part of their estate planning, these are really important considerations. You know, so we’re trying to, you know, share them in amusing fashion somewhat, but you know, these are important things to think about, which is why um, you know, we tell you very often, you know, one of the big reasons to set up a trust and a continuing trust for your kids, and I’ll say Anna’s my daughter. You know, when the money is in a trust and maybe she’s the trustee of that trust and I’ll say, “Anna, you want to make sure you keep this as yours, you keep it in a trust.” And then when husband argues that uh gee whiz, if you love me, you’d put my name on it so I can pay the bills. And she said, “Well, you you know I do, but you know what a son of a gun my daddy was. I can’t. It’s in the trust.” And it gives her plausible deniability to protect your interest. Absolutely. 100%. So, what are some of the other, you know, considerations or planning points that you have or and then I’m sure you have some questions as we go through this, but what what other things do you counsel folks that maybe are um uh looking to maximize their share of the distribution of marital assets? She comes in with a with a box, you know, full of deeds and and whatever statements. Well, it it I understand the question. The answer is not as straightforward. The the starting point is to maximize any take from a divorce. Ultimately, it’s about the protection that started on the front end before you went into the divorce. So, you’ve talked about trust. We think about prenuptual agreements. right now. Ultimately, when you talk about a young couple that’s getting married, often times they don’t have anything that they see as valuable enough to protect with a premarital agreement. Certainly, we understand that. But when we talk about later in life marriages, then I just make a a sidebar comment on that though. However, if there may be an asymmetric earning capacity between a young couple, maybe, you know, one the um the spouse who may have bone a bone partnership or an ownership interest and the other person, you know, works for a salary and might make a couple hundred,000 a year, but probably not millions. That that’s probably a consideration we’re thinking about, is it not? Yeah, I I agree with that. Um, again, I guess that just depends on age, status at the time of marriage, those sorts of things. But that inequity in income potential could be addressed through a prenuptual review. I agree. I agree. So, sorry to interrupt. That’s okay. We’re talking about more getting back into the gray zone here. Right. So, we you asked me about how, you know, how do you protect yourself in the back of my neck? Well, you said how do we, you know, protect as much as possible? uh trusts prior to marriage, prenuptual agreements, those are two primary vehicles for the protection that you’re talking about. when we get into the post uh wedding phase right and the marriage is building over a number of years at that point um there’s a presumption at least under Florida law which is the state that we sit in right now and I would say under most states uh as of not any property states look at correct uh most states now have a presumption that all marital property is to be valed divided 50/50. There are offsets. There are reasons that courts may say one spouse deserves more than another. But when you come into my arena, um the the honest answer would be I can’t tell you on day one what that inequitable distribution might look like. I can tell you that but the presumption is is equal. The presumption is equal as a starting point. Um, and there are circumstances that could lead a court to give an inequitable and sometimes it’s as simple as horse trading, right? Um, maybe let’s say the husband uh was the primary income earnner, right? And the husband contributed to a retirement account uh at the maximum level and he’s 10 or 15 years out from retirement and the couple has a house and maybe the house has got significant equity. Well, the husband may say, “Listen, that retirement account is worth a lot more to me in the long run than the house is in the short run.” And that may lead the parties to agree to an inequitable distribution or ultimately if this were to be litigated, it may lead the judge to say, “Well, I’m going to do this inequitable division, but it’s still fair under the guys that the cash now is is money up front, right? um present present value of money versus for the husband he’s not getting cash up front because it still resides in the retirement account but he’s got it down the road. Sure. So to sound bite that though there’s a lot of potential area for disagreements and expensive litigation that could happen in a lot of cases that might be best blunted with prenuptual trust plan. Absolutely. So let me segue a little bit now. you find, it’s always been my belief that using trusts uh for this purpose are far more palatable than prenups. Prenups just have a kind of a distasteful onus to a lot of people. Um did you agree or Well, I or they’re not comprehensive as comprehensive as well. It’s really just existing assets. What what I would say is this. For those people who think ahead and have the um the the resources and the understanding to establish trust prior to marriage that gives an added very thorough layer of protection. However, trusts don’t address all of the issues that could come up in the course of a marriage. Right? So the prenuptual agreement could be the finetuning of anything that perhaps isn’t dealt with in the trust. So the answer is an adder an layer. It’s a multi-layer of protection and that’s the way it should be addressed. Good. And and you I’m sure that you’ve been thinking about a lot of questions as as you often do. Tell us, you know, what some of of uh Yeah. So Jason, I was I’m a little curious, you know, if there’s minor children involved. If a client comes to you, you know, a wife, there’s a divorce potential and they have minor children. What are some considerations, you know, that you guys might ask about or be thinking about in that situation? Well, when we talk about minor children, the first thing that comes to mind in any divorce is where are the children going to live? Um, we used to talk about this as custody. uh Florida law does not use the term custody anymore. It refers to it as time sharing and there is a presumption that time sharing is 50/50. So the idea that the children shall reside with the mother the majority of the time is now considered antiquated. Um and that’s attached to the caretaking role of the of the wife, right? Um, but that’s considered antiquated. And now Florida law to sort of recognize the old view versus the new view uses the language time share. Okay. So, there’s a presumption of 50/50 time sharing. That’s the first issue that any uh couple with young children in the midst of divorce are going to think about. What about support issues? There’s a lot of slime balls in Florida. You know, mom getting paid is often somewhat of a challenge, right? Yes. Well, you know, there there is that to be sure. However, when we talk about the time sharing split, um, if it’s a 50/50 split, then it’s 50% support from each county. So, you can see how those levers go up and down, right? If I’ve got 20% time sharing, then I’m only covering the the percentage of support, right? Sure. And and let me be clear. So if it’s 50/50 and then the levers tilt to 80/20, then if the child is with the father 20% of the time, then he’s paying 80% support to the mother, right? Cuz he gets credit for the 20% he’s got aside, right? So that comes into play, which which gives the mother a significant incentive to, you know, to keep that that child home. Exactly. Exactly. And I’m sure that there’s a lot, you know, how enforceable is it? Say that, you know, say that I’m, you know, well, I’ve got the kid 20%, but I only I want to pay the 30%. You know, how do you chase with the other 50? How do you get your money out? Well, yeah, the courts have uh things called uh we would refer to that as a motion for contempt, uh motion for enforcement, and we would uh But how collapical is it though? I mean, you hear a lot of horror stories. Well, the length of deaths. Sure, there’s no question about that. It it really comes down to the judge that presides over the case. Some judges are more aggressive about enforcing those things than others. Uh my experience has been that most judges will uh consider a matter and perhaps you know if we have a delinquent dad have the delinquent dad in front of them and say listen this is your one bite at the apple right you you you make it right and all is forgiven but if you don’t make it right then you go to jail and that’s the end result of maybe there’s an old there’s an old there’s an old saying then a good lawyer knows the law but a great lawyer knows the judge not not sure if it’s ethical or not for me to to say that’s correct but not say this it’s not wrong so uh um and what about I guess finding delinquent dads or you know in terms of the sport issue is that something that you know is I guess it’s you know husband uh underwriting and picking the right Well, is this important consideration, right? So, let me let me say this. I think that as uh much probably like your practice has evolved over the years, my practice has evolved over the years and so clients and their needs change as the lawyer’s experience grows, right? But certainly on the level where there are delinquent dads and they’re trying to hide and stay out of uh view to to keep whatever money they may have. Um there are folks that that I would employ and I’m sure other lawyers who do my type of work would employ to find the people wherever they may be and and make things happen. So So you also then now it depends a good lawyer is a good PI. Absolutely. the uh so what what about you know you want to you have another question and I’m sorry oh no I’m always talk too much no I was um I did have I guess a question you know let’s say you work with a a client divorce goes through after that um what are some things that that you think they should consider after that process is done maybe there are lots of things to consider once the process is complete number one of which is am I ever going to get married again, right? Um but but beyond that, I I think really a a thoughtful

look back over what has happened, right? Why am I looking back at age 50 on a marriage that ran 25 years and here I sit divorced? Um I think that’s that’s worthy of introspection. Beyond that, when we talk about assets and what the future looks like, then absolutely no question. Um, if there are assets to be protected, now is the time to protect them, right? Um, and if at some point there is another marriage on the horizon, then before that advances, there needs to be a consultation with an experienced divorce lawyer to talk about what a thorough, we would say, bulletproof prenuptual agreement looks like. Yes. Right. Yeah. And um, so th those are the sorts of things that that come to mind. Thank you. Yeah. Do you find the onus of a prenups particularly, you know, for, you know, mid-career and and older folks is lessened at all over the years as the country’s been more sophisticated with wealth planning or is it still, you know, a big bug? You know, to live. I I I would say this, Jeff. I I agree with you that as financial planning has become more sophisticated, perhaps it is not as necessary, but I would never move into that. I think it’s 100% without having but you find that they still you know it’s a point of friction you know or more palatable maybe yeah oh maybe I missed maybe I missed it yeah I don’t think it dampens the romance as much as it used to I I think at this point the level of sophistication especially among people who would actually need it right that have something to protect I think everybody goes in saying okay this is this is part of life at this point and it’s something that you know that that your clients you know because and I hope that you’ll share this with them. Um, might want to consider is, you know, say that you have a second marriage. Both spouses bring assets to the table. It sticks and they’re happy. When they do estate planning, there’s still a real bias toward just putting the current spouse at one of these yesterday. As they, you know, he had one kid, she had two, but she is the his beneficiary. He’s probably going to die first being a guy, right? But, you know, on the mortality tables, it could have happened the other way. you could die first and he’s her beneficiary. But they each have kids in previous marriage. And I’ll say I’ll call them uh you know John and Betty and I say you know Betty if you know that you know if he dies first or if you die first that money goes to John you know and it’s all his you even though you have a trust and a will that says it’s to be divided if your kids get some of the money and John doesn’t have to do that it’s all his because he’s the beneficiary you know. So did a lot of folks kind of don’t think past that when there are kids from previous marriages the subsequent you know levels and it’s so important right to maintaining the wealth you know in the direction that they care about right and ultimately that you know my my firm because of the clients that we represent we have a more than a passing familiarity with estate plans and things of that sort but it’s not specifically what we do however we do have to feel those types of questions and con those considerations. And what I would say to anybody who’s watching us who has those concerns, what’s most important is that you figure out what you want to do because the law, a good lawyer who drafts a proper agreement can script out exactly what you want to happen. Um, so the most important thing is that you know exactly what you want to happen and I would suggest that you talk about it with the stakeholders, right? John doesn’t want Betty not to know what he plans to do because that’s a that’s that’s friction waiting to happen, right? Um, but I think rule rule number one is know what you want to happen and then seek counsel from a lawyer who can put it in writing so that it’s executed in accordance with your wishes. Excellent. So, as we approach the uh um the half hour, Mark, did you have any other questions? I don’t think so. Yeah. And one one I guess one last thing is, you know, alimony, which has really changed so much over the years. What’s going on these days with alimony in Florida? used to be lifetime, you know, you know, by default, but really that’s not the case anymore. There’s no such thing as lifetime alimony. Now we have what is known as durational alimony, right? And it’s prescribed according to a formula that’s set out in the Florida statutes and it’s um you know you can sort of just do the math and it will tell you long-term marriages do still have the potential for long-term durational alimony. Um but it is not what it used to be. Um and there is a prescription in terms of what the amount is and it’s roughly you know 30% of the difference in net income between the parties. Um and it may it’s some slight difference from what I just said but it’s in that ballpark. Um and again duration the duration is often a function of the length of the amount. It is always the the function of and then before we go we probably should talk about social security quadros and that kind of stuff. Right. Right. Right. Um did you care to share or you want me to ask you a question? Well, you certainly can ask me a question, but essentially if there’s any sort of retirement split, then in most circumstances, it’s going to it’s going to call for a qualified domestic relations order, which is a quadrup. It’s particularly relevant when there are military retirements at stake. We see that most often, right? So, and basically what that does is orders half of the retirement assets I think right if there’s a pension or if there’s IAS or 401ks and that kind of stuff and is it is that the ball pretty much 50/50 between the parties or is that negotiable? uh it is pretty much 50/50 though it can be negotiable and what it does back to that example I was saying that inequitable uh distribution sometimes retirement would be split a certain percentage in exchange for other assets up front being split but but you are correct and what that qual the quadro qualified domestic relationship with is it sets forth for the plan administrator exactly how the uh retirement assets are being told that’s very helpful. Any any comments on social security? That’s kind of a free pass, right? I think you get if you’re married long enough, the spouse gets social security against no diminuation, I think, of the the earnest social. And that that was fantastic. You know, folks that that have seen this, please share it with your friends. And I there’s a lot of, you know, that was a pretty um there’s a lot here to unpack. So, I would suggest you listen to it a couple of times over. really especially if this may impact you. If you’re thinking about a relationship or you know you’re, you know, you’re an old, you know, a more senior person and thinking about unwinding the relationship and what the consequences might be and and the strategies that might help and particularly to protect your children and that’s something that, you know, Jason is an important ally that we’re happy to share. We know a little bit about it as well. So if you think you might wind up in this kind of situation, please don’t hesitate to reach out and we’d be very happy to give you our advice, you know. So that I guess that’s it for another edition of uh Smarter Money Matters. It really does, you know. I’m Jeff Camarda, J Jason Porter of the Porter Law Firm. Thank you very much for coming. You have a web address for her? We do. Pickporter.com. And I was going to say if I can the the information we provided today is general and should anybody need more specific advice than that. Consult an attorney you’re comfortable with certainly reach out to me at pickper.com. Would be happy to help. Right. That’s right. This is general not legal advice today. Regardless of his relationship with many fine judges and Anna Winerlook, our super thanks uh thanks for watching. We’ll see you next week. Thanks guys.