Episode Description - Creating Your Own Divorce Financial Plan
What if there was a simple way that you could save time and money in your divorce while also securing your post-divorce financial future too? By creating a divorce financial plan you can do exactly that.
Amy Colton, a wealth advisor, mediator, and the founder of Your Divorce Made Simple LLC, shares her unique approach to divorce financial planning that helps divorcing couples streamline the divorce process without compromising their financial future. Amy guides her clients to make sound financial decisions by creating and using a comprehensive “divorce financial plan.”
As a divorce financial planner, Amy has combined her extensive financial expertise with solid mediation skills and a passion for helping those going through divorce. She now helps couples create amicable, cost-effective divorce resolutions that ALSO protect their financial nest egg for the future.
In this podcast episode, we cover a range of financial topics including grey divorce, social security, and understanding the tax implications of a divorce financial settlement.
If you are nervous about your financial future post-divorce, tune in to this episode to discover what you need to know to create financial security for yourself starting now.
Show Notes
About Amy
Amy is a Wealth Advisor with Forefront Wealth Advisors and has devoted her practice to educating and supporting women, especially ones that have gone through major life transitions. She is also the founder Your Divorce Made Simple LLC, where she combines the role of Certified Divorce Financial Analyst (CDFA®) and Family Law Mediator helping couples and individuals achieve win-win outcomes during the divorce process.
Connect with Amy
You can connect with Amy on LinkedIn at Amy Colton and on Facebook at Amy Colton and follow Amy on Instagram at Amy Colton. To find out more about how to protect your assets in a divorce and how to work with Amy, visit her website at Your Divorce Made Simple.
Watch for Amy’s new book coming soon. The Kitchen Table Divorce Book.
Key Takeaways From This Episode with Amy
- Amy Colton is a wealth advisor and certified divorce financial analyst who helps clients, especially women, navigate financial aspects of divorce.
- She combines financial analysis, mediation, and divorce planning to help couples achieve win-win outcomes.
- Amy advocates creating a comprehensive divorce financial plan before hiring attorneys to save time and money.
- Key components of a divorce financial plan include:
- Gathering all financial documents (tax returns, bank statements, investment accounts, etc.)
- Creating a complete picture of marital assets and debts
- Analyzing business finances if applicable
- Developing post-divorce budgets
- Considering tax implications of asset division
- Evaluating options for the marital home
- Amy often works with clients early in the divorce process, before attorneys are involved, to do financial analysis and mediation.
- Social Security benefits are an important consideration, especially in "gray divorces" (after age 50).
- She typically conducts mediation in 1.5-2 hour sessions over several meetings, rather than all-day sessions, to manage emotions and allow for reflection.
- She can work directly with couples or communicate between parties as a neutral party.
- Amy emphasizes the importance of understanding the long-term financial implications of divorce settlements, especially for those who haven't managed finances before.
- She offers free consultations and a non-judgmental approach to help people understand their financial situation during divorce.
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Transcript
8 Ways to Create A Better Future With Divorce Financial Planning
SUMMARY KEYWORDS
divorce financial planner, wealth advisor, mediation, post-decree budget
SPEAKERS
Karen Covy, Amy Colton
Karen Covy Host
00:02
Hello and welcome to Off the Fence, a podcast where we deconstruct difficult decision-making to try to figure out what keeps us stuck and, more importantly, how do we get unstuck. I'm your host, Karen Covy, a former divorce lawyer, mediator and arbitrator, turned coach, author and entrepreneur. With me today I have Amy Colton, and Amy is a wealth advisor with Forefront Wealth Advisors. As a financial advisor, she helps her clients get their financial house in order so that they can confidently choose their destinies and not be a victim of circumstance. For more than 10 years, Amy has mentored women going through major life transitions, such as divorce, death of a loved one and sudden inheritance. She's also the founder of your Divorce Made Simple LLC, where she combines the role of certified divorce financial analyst and family law mediator to help couples achieve win-win outcomes during the divorce process.
01:00
Amy, welcome to the show
Amy Colton Guest
Thank you. Thank you very much.
Karen Covy Host
I am happy to have you here and I'd like to start with a little bit of your backstory, if we could. What drew you into financial advising, Because I know it's not your first career? So what drew you to financial advising and specifically working with women in transition?
Amy Colton Guest
01:22
Well, a couple of things. I started my career in technology and computers back in the 70s and there weren't a lot of women in that, on the technical side of the business and I spent my first 20 years of my career with IBM, spent 25 years in the industry and one of the things that I noticed a lot is being discounted as a woman. When I started there were men who would take me aside and say I don't think women should be in this business. And having spent 25 years in the corporate world in that male-dominated field and then going into another male-dominated field later in life, I had a passion for helping women and I just wanted to make sure, like if a male advisor is talking to a couple, sometimes the male will talk to the male and the woman won't be part of the conversation, and so it was my goal to have her be part of the conversation, either working with women alone or working with women as part of a couple. I wanted to get her questions answered and I wanted to educate her.
02:39
So many women delegate that to their spouse and then when in a divorce situation, they don't know what to do. They hadn't handled the money, they hadn't handled the investments, they hadn't done anything. They don't even know what questions to ask. So my goal was to educate and to make sure they're part of the conversation. So that's kind of the backstory.
03:03
But then, when I got into this field, I was working with a family law attorney who decided she didn't want to do divorce anymore because it was too stressful, and so she started sending her clients to me. And when she started sending them me, I realized how much quicker we could get people to completion, how much less money it costs to do it this way and how much more amicable it was to do it this way. And so sometimes I work with a couple and sometimes I work with just one party, but we were able to get through to agreement so much quicker, and over the years I've perfected that model. I use the same model today as back then, but it was this family law attorney that really got me started.
Karen Covy Host
03:59
So let's, there's a lot to unpack there. I'd like to dial this back a little bit and talk about you know. What was it or what is it that you do? Is this mediation? Is it financial mediation? If it's mediation, how does it work with one person? Tell me more about what you do and what your model is.
Amy Colton Guest
04:18
Okay, so I am a certified divorce financial analyst as well as a wealth advisor, so I have a couple of certifications in divorce. I also had gone through the certified divorce specialist training, which deals with the emotional, the financial and the legal sides of divorce, because you have to address all three. And then, because I was doing a lot of mediation, I became a family law mediator. So I've kind of combined all of that together and what my goal is is to work with people early on in the divorce and try to come up with what I call a divorce financial plan before they hire an attorney. So trying to do a lot of upfront financial analysis prior to hiring an attorney. And sometimes we can get all the way to the end of agreement and then just get the attorney to file the paperwork and write the divorce decree.
05:25
I don't write divorce decrees I'm not a lawyer and I think it should be done by a legal professional and then sometimes we get stuck along the way and we need professional help. So it rarely and I'm not saying it doesn't happen, because it does, but sometimes people need a lawyer day one. But most people think when they're thinking divorce they need to hire a lawyer day one and about 80% of those people would be better off hiring a financial person in the beginning, just to get the marital estate in order before going to the attorney.
Karen Covy Host
06:02
Okay, so you talked about a divorce financial plan. When I hear that word like, that could mean a couple of different things. To me, it could be a financial plan, in other words, how are you going to finance your divorce, a plan for that, or do you? Do you mean that? Or do you mean the divorce financial plan as in? This is how we're dividing things, or do you mean?
Amy Colton Guest
06:26
the divorce financial plan, as in. This is how we're dividing things, both because the budget is critical. Ok, so when I look at, forget about divorce. But if I look at what I do as a financial advisor, we create a financial plan and that financial plan pretty much looks at everything that money touches. It's everything in your estate, but it also is what's your budget, what's your cash flow? How can I afford to do this? What is my life going to look like post-divorce? What does it look like today? So the only difference between what I do with my non-divorcing clients is that I don't do investments when I'm talking to them.
07:06
Now if they want to do that. After the divorce is final, they can always come back to the Forefront Wealth Partners and I can help them with that. But during the divorce process we look at all the same metrics. We also get all the same documents and we create a spreadsheet of everything that's in the marital estate all the assets, all the liabilities. And then we start, if we, once we've created that document, we start talking about, okay, who wants what, who, where should it go? What makes sense? And then we look at, hey, what's your lifestyle going to be after divorce? What's your budget going to be after divorce? Can you afford to keep the marital home? Those are all the things that come up.
07:53
And then people need to understand, hey, what's this going to cost? How long is it going to take? What's a realistic expectation? And they also need to know any tax ramifications of the decisions they're making. So some assets are taxable, some assets aren't. So you need to look at that as part of the marital estate, because taxes are liabilities. I mean, people talk about dividing assets, but they also have to talk about dividing liabilities as well.
Karen Covy Host
08:31
Yeah, of course, and you know you work with both individuals and with couples. So I'm going to go out on a limb here and assume that when you're working with a couple it's in the role more or less of mediator, like in that you're neutral, You're not trying to advocate for one person over another. Is that right, Correct?
Amy Colton Guest
08:47
Correct. Just you know people get a lot of confusion around that, so I want to clarify as a financial person.
08:54
I'm a neutral. I am just giving you advice. I don't represent either party and that's a distinction, a clear distinction between a lawyer, because a lawyer can only represent one party and people get confused about that. Working with someone like myself, they don't realize I am a neutral and it doesn't matter if I'm working with just one party or I'm working with a couple. So, because a lot of times I'll work with one party but they want me to communicate to the other party because they don't want to talk to the other party. So they want me to do it for them and I'll do that.
09:33
But if we were, if I work with a couple, yes, it is mediation and my mediation is a little different than most mediators, at least in Texas, where I, where I mean I work all over the country, but a lot of my clients are from Texas because I am in Texas but my mediation style is very, very different
So I tend to first of all, as I said before, I'm you got to deal with the legal, the emotional and the financial. When you're dealing with divorce and the emotional. This is a highly emotional time for everybody and what I have found most mediators will try to. First of all, most mediators will mediate after the two lawyers can come to an agreement that they send their clients to mediation and they try to get it done in one day.
10:29
I do mediation upfront and I also don't try to do it one day. I try to do it in maximum of two-hour sessions, so anywhere between an hour and a half and two hours, because I find that this is highly emotional and sometimes we hit a nerve and it and I like the parties to calm down. If they haven't, if they haven't hired a lawyer or spoken to a lawyer, maybe now's the time to get an opinion or they can go back to their support group whoever that is and got to be careful with that. But um, just to get a little bit of reality check. So I tend to do it in two and a half hour and a half to two and a half hour sessions. Typically we need three or four, but it's not done all at once.
Karen Covy Host
11:17
Why, you know, is it just the emotionality that you don't like? I mean? Trust me, I know both ways. I'm not a fan of all day mediation. It used to make sense before we could Zoom and if you had one party in one state and another party that would have to fly in for mediation. Okay, doing as much as you can in one day, then made sense.
Amy Colton Guest
11:38
But now that we can Zoom.
Karen Covy Host
11:40
I don't know that I'm a big fan of all-day mediation. Why aren't you?
Amy Colton Guest
11:45
Because people get tired and sometimes they just agree to get it over with and that's really not in anybody's best interest. And the other thing about Zoom you know that has before the pandemic. I would never have thought I would be doing this via Zoom, but it's allowed me to do this work just about anywhere in the United States and almost in the world. But the beauty of it is too, is these people are not physically in the same room and they're having a conversation, whereas when they go to the mediation the other kind of mediation they're in separate rooms and that mediator goes back and forth and that takes time and at least when I'm having the conversation both parties are hearing the same thing at once.
Karen Covy Host
12:35
Yeah, I really like that. There's I mean, there's a lot of different mediation styles, but what I have found is, especially when you have a former judge mediating, that's what they're used to. That's more of the courtroom style, where it's what we call shuttle mediation, the mediators going back and forth between the two rooms, and I too, I'm with you. I like to have the parties communicate if they can right. It doesn't always happen that way, but how does you, when you're working with this divorce financial plan, what goes into that Like? What should people, what documents should they pull together? What do you need to help them say this is your financial reality.
Amy Colton Guest
13:26
OK, so let's just I going to be tax returns, bank statements, brokerage accounts, retirement accounts, pensions if there's any pensions it is the same list of documents that I require when I'm doing financial planning for non-divorced people. Now, if it's a business owner, then I'm going to have to look at the general ledger. I'm going to have to look at business bank statements. I mean, I've worked on a couple of cases where I've gone through back four or five years and looked at the money flow, trying to make sure money wasn't being hidden anywhere, trying to make sure thatt being hidden anywhere, trying to make sure that the business expenses were legitimate. So I went through credit card statements, bank statements, general letter, I mean you name it and then if there's a business, it might not, it also might have to be evaluated. So we would need three years of tax returns and things like that Is the valuation.
Karen Covy Host
14:27
That's not something that you would do, though correct.
Amy Colton Guest
14:30
Depends. Okay, there are various forms of business evaluations. I am not a formal business evaluator but I tell my clients if you want one I can get you one. There's someone that I work with who will do that and you know it could cost $10,000 to do that. I've also done very informal. We have the software to do it. So informal business evaluations based on three different methodologies and I have someone who will do it for like a thousand dollars. So anywhere between a thousand and 10,000, your choice, whatever you need. Now, obviously, the thousand dollar, if you got guys go to court. The thousand dollar version isn't going to stand up because it's not certified and blah, blah, blah. But if that's all you need just to know what the business is worth, so you can split it up, and I've done that on a couple occasions and they're good with that. It's just a way of evaluating the business based on you know what the cash flow has been for the last three years, what typically the business would go for.
15:39
I mean you get a lot of good information. So if you don't have, if you're not going to court and you just want something to give you a ballpark of what the businesses work, then you know you pay a thousand dollars and you get a pretty good detail of that. But you know I've had to do that a couple of times.
Karen Covy Host
15:56
So let's talk to about. We've talked about business, we've talked about what the documents are. Talked about what the documents are. What about social security? Especially because I know a lot of people. The biggest demographic of divorcing people in the United States are those who are 50 years old and older. Right, and assuming that social security doesn't go bust someday which everybody talks about and who knows but assuming that it's in place, it can also play a role in cashflow as you get older. So how does social security figure into a divorce plan?
Amy Colton Guest
16:33
Well, that's another area that I'm also pretty up to date in because I have an accreditation as a national social security advisor, and the reason I have it is because you're absolutely right, gray divorce, which is divorce after 50, is the fastest growing area of divorce in the world not just the United States, but in the world. And people ask me all the time why. And I think there's two issues. One typically a lot of people stay together for the kids and at that point the kids are gone and there's kind of their big reason for staying together isn't there. And the other thing is they look at, hey, I'm sick, maybe I'm 65. I maybe have 20 good years left to me and I don't want to spend it with this person.
17:20
So I think I think the gray divorce, that's what's happening with gray divorce. I see a lot of it. Actually, most of my clients are in that category. Social security is tricky, but you got to know the rules, okay. So if you are full retirement age, which for most people is 67, you can claim half of what the better paying spouse would get. So, for example, if your husband is getting 4,000 at his full retirement age, you would get 2,000. If 2,000 is more than you would get on your own.
Karen Covy Host
18:03
So let me interrupt for a second. You get your 2000. Let's say there's an age disparity. Let's say your husband's 67 and the wife is only 65. Can she start collecting that 2000 when he turns 67, or does she have to wait till she turns 67?
Amy Colton Guest
18:21
Well, if they've been divorced for two years, she can turn it on. She doesn't have to wait. You can take Social Security at age 62, as early as 62, or as late as 70. But if you've been divorced for two years, you can turn it on as long as you're 62, you can turn it on whether he's taking it or not, but then you won't get the full.
18:57
You probably won't get the full until you're full retirement age, so it will be decreased. But say you are 67, so you are full retirement age and he hasn't taken it yet because he wants to wait till he's 70 to max it out. You can take, if you've been divorced two years, you can take it and get the full amount. So you don't have to wait for your ex. You do not have to wait for him to take it.
Karen Covy Host
19:21
Yeah, I think that's a. That's a really important point, because a lot of people, a lot of people, are confused about that and they think that their ex is holding them up.
Amy Colton Guest
19:31
Yeah, and the other thing that can get confusing they go do I have to talk to him about it? And the answer is no, you don't. You have to talk to Social Security, but you don't have to talk to him.
Karen Covy Host
19:44
Yes, and the other thing that people get confused about they ask me all the time, is they think that their spouse has to let them like it's a negotiation.
Amy Colton Guest
19:54
No and it doesn't affect what they're going to get either. So they're still going to get their full amount. You're just going to get half, as long as it's more than what you would get normally. And say you get $1,500 on your own, but you could get $2,000 based on the divorce, you can get what? The supplemental $500. So-.
Karen Covy Host
20:13
That's a beautiful thing, so I know you know when you're. You do a lot of work in this divorce plan, but you also advocate for people to make a post-divorce budget, which is also something that I think is imperative. But why do you have people make a post-divorce budget? What's the value in that?
Amy Colton Guest
20:34
Because I want to make sure that, whatever they're thinking their lifestyle is going to look up like post-divorce, they can afford it. So, for example, say I'm getting a million dollars from my divorce but I can't make my monthly bills. So say my budget is $10,000 a month and I can only show $8,000 coming in. Where am I going to get that additional $2,000 a month that I need to live on? Then we got to look at investments. What kind of investments do you have? Can we put together some income generating or dividend generating income? So you're protecting the principal investment but you're getting enough interest or dividends for the cash flow gap that you have.
Karen Covy Host
21:25
Yeah, I think a lot of people, I mean, when you say, well, I'm getting a million dollars in my divorce, that makes a lot of people, I think, feel rich, like, oh, I have a million dollars. But to your point, if they don't realize that they're drawing down on that million dollars at the rate of, in your example, $2,000 per month, well, if they're only 50 and they're drawing down at that rate from 50 to 65, and then they retire and they're drawing down even more, then that million dollars isn't as much money as it seems like.
Amy Colton Guest
22:00
Right, and let me tell you, it happens a lot, unfortunately. People don't really understand the concept of protecting your principal and not drawing down the money. I once had a client who hadn't worked in 20 years because she was raising the children, raising the family, which is fairly typical, and there's nothing wrong with it?
22:21
But I told her after the divorce was over. I said you cannot live on what you just got. You will run out of money and you have to go back to work, and so sometimes that's a hard lesson to You know swallow, but that was the reality. Now I mean, I can do cashflow projections through retirement, but I also can tell you, just looking at that, you know, you, you, you just do the simple math and say if you're going to be taking $2,000 a month for the next 30 years out of your accounts, it's going to be depleted. You can't keep up with it. Your investments aren't going to grow fast enough for what you're taking out. So my goal is to keep as much of the principle intact, if we need to, and also look at hey, you may not be able to buy a house, you may need to go back to work.
23:18
Some of the tough reality decisions that you know, I think, when it comes to the marital home, that's usually the biggest asset that people have, and the big question that has to come out right from the get go is is one party going to keep it or are you going to sell it? And if one party is going to keep it. You need to make sure that they can qualify for a mortgage on their own, because otherwise that's going to be tricky. Or if you're going to sell it, you got to understand there may be some tax ramifications of selling it as well. So, for example, if it's over $500,000 in equity, you're going to pay taxes. So I have-.
Karen Covy Host
24:01
You mean appreciation?
Amy Colton Guest
24:03
Well, it's the equity in the house which is the appreciation. So I have a couple that is getting divorced. They bought their house 30, 40 years ago for 100,000. Now it's worth a million. So they've got about $900,000, just on a rough level $900,000 of equity and capital gains, which means $500,000 will be forgiven by the IRS. But that other $400,000 has to be split because you're both getting a tax bill, and how much taxes you pay really depends on what other income you have that year. So you got to understand all those decisions while you're in the process of making it.
Karen Covy Host
24:41
Yeah, and I think what I'm hoping people will hear is that the time to get to this financial understanding is before you make your final decisions. Because, to your point, if you're going to sell that million dollar home and you're going to have $900,000 in equity, if you're selling it as a married couple, well then, $500,000 of that four in appreciation and equity, you're only going to have $400,000 to pay tax on. But if your spouse has walked away from the house and you're just a sole person now, that $500,000 of forgiveness drops down to $250,000. So it's a much bigger tax burden. And that's not to say that there's a right or wrong decision, it's just know the tax ramifications of your decision.
Amy Colton Guest
25:34
Exactly, exactly, exactly.
Karen Covy Host
25:38
What else do you recommend that people do, like? How can they really educate themselves about their finances before they start to make decisions about who gets what, so that the decisions they make are the most financially sound?
Amy Colton Guest
25:57
Well, and that's why we start out with just creating what's the marital estate? Look like Everything, putting everything that's on there. And when I say everything, it's pretty much the house, the investment accounts, the cars. Those are the big items. And is there credit card debt? How much debt? You know? How much? Do you have car loans? Do you have mortgages, you know? So you have to look at all the assets, you have to look at all the debt, and then you start having the conversation about okay, what would you like, what would he like? You know what each party likes. Sometimes that's easy, Sometimes it's not, you know. Fortunately, I don't get involved in who wants the cat or who wants the dog.
Karen Covy Host
26:43
That is a good thing. That is a very good thing and it's interesting. I just interviewed someone a while ago about pet custody and that's her niche and that's what she does, and God love her. Um, but when it comes to making this, you, you, so you couple comes to you and you help them make this divorce financial plan right. Um, and then how does doing that save them money, or doesn't?
Amy Colton Guest
27:14
It does save them money because that basically, it's going through the discovery process. That is so if you go to the discovery process with two attorneys and they charge you hourly, that's going to. I have no idea what that costs, but I know it's way more what we charge to go through that with us, because we don't charge hourly and we, you know. So we basically charge a flat fee and you can use as many hours as you want.
Karen Covy Host
27:42
Wow, that's amazing because I know there are some lawyers who are kind of dipping their toe in the water of flat fee, but by and large most lawyers are going to charge by the hour and their hourly rate isn't cheap.
Amy Colton Guest
27:58
True, that's why I try to do as much of the work up front here before you go to the attorney.
Karen Covy Host
28:07
But what happens in the case where clients have already gone to the attorney? They're already in the process To your point I think you mentioned this before that the attorneys discover that they can't settle this thing and then they send it to you. Will you take cases in the middle like that?
Amy Colton Guest
28:25
Yeah, I've done that a couple of times. A lot of times people realize they're spending so much money on the attorneys and they're not getting. They're not moving forward, or certainly not moving forward as fast as they want to, and they will just tell their attorney we're going to put this on hold for now.
Karen Covy Host
28:45
We're going to go try to work things out with Amy and they do come to me and we do that kind of work. What, how? How do you break the logjam when the lawyers couldn't?
Amy Colton Guest
28:54
Because I'm having a conversation with both parties. We're talking together and I think that makes a huge difference because when you have attorneys, there's four people in the conversation, it moves slower and you go to your attorney, your attorney goes to his attorney, his attorney goes to him and back and forth. That takes time and costs money. People are more frustrated with the time and money they're spending to get to completion and I think by having the conversations together whether we do it as a couple in a mediation session, or even I've even done it where I've worked with one party and I just communicated with the spouse- Interesting.
Karen Covy Host
29:38
So you would communicate with the spouse directly like, not through the lawyer.
Amy Colton Guest
29:44
No, not necessarily, sometimes I it depends, but most of the time just directly because, again, I don't represent either party. So it's a little different, you know, scenario as opposed to an attorney who can't talk to the other party because they represent the spouse.
Karen Covy Host
30:04
Right. So what happens in the situation where one spouse comes to you let's say it's the woman comes to you and says you know, here's all the documents, but I think my spouse is hiding something.
Amy Colton Guest
30:18
Well, yeah there's a couple of ways to do it and first of all, you see a lot in the tax returns. The tax returns tell us a pretty good story about what's going on underneath the hood. But if not, I mean I've even crawled into, like I said before, with businesses that are self-employed. Businesses are an area that you can see a lot too, but you've got to really crawl into the general ledger. You have to look through the balance sheet, you have to look through the bank statements and really try to understand that. So I'm not a forensic accountant, but that's the kind of work they do, the kind of work they do. The other thing and a lot of people don't realize this if money is really truly being hidden I probably won't find it in either real forensic accountant You'll have to hire a private investigator. So that's another avenue, if you really. But we can still tell a lot what's going on.
31:17
I'm going to tell you a funny story. There was a case I worked on a couple years ago and the husband was trying to show that his business wasn't doing as well as it had in previous years and when I went through and I was looking at, he just hired this contractor and he's paying this contractor a lot of money, way more than the contractor who's been with him for many, many years. And I said to the this was a case that actually went to court. I said to the lawyer I think he's having an affair with this woman and I think he's siphoning off money to her so that he looks like the business isn't doing as well and he doesn't have to pay as much child support. And it was true. You really can see a lot of what goes on when you do that kind of analysis.
Karen Covy Host
32:07
And how could you? You just did it. You just found that because you saw these big payments to the contractor. Yeah, wow, that's, that's really cool. I mean, I've seen a lot of things in my day and I always tell people that if your spouse owns his or her own business, that's the place where that gives them the biggest opportunity to hide money, if they choose to. Not saying that, everybody does. But I remember one time another story I had a client whose spouse owned a bunch of hair salons and all of a sudden you know, right before they're getting divorced they needed major capital improvements. They all had to be remodeled. They had, you know. So what the you know like a business does is just ups the ante on the expenses and then says, well, I'm not doing as well, and it really wasn't true at all.
Amy Colton Guest
33:05
Yeah. The funny I didn't really work. I worked on this case just peripherally, but this was an air conditioning guy in Phoenix and he was trying to show that his business was losing money and I thought maybe if he worked in Alaska I could buy it, but not Phoenix, yeah.
Karen Covy Host
33:24
Air conditioning in Phoenix. I would think that that's pretty steady. Yeah, I would think so too. Oh my, but what's the difference, too, when people talk, now that we're on the subject of business, what's the difference to when people talk, now that we're on the subject of business, is there a difference and maybe I'm using the wrong term between the values in a lifestyle business and say you know, a regular business, in other words, a business that manufactures something or that has a big, you know, a lot of employees that provide services, versus one person who's really the business provider? Right? So it's you know what I mean, like a sole practice law office, for example.
Amy Colton Guest
34:11
It really isn't any different. I mean, most of the ones I worked on are sole proprietor service businesses, but it's no different. If you know you may have to go through some more, you'll have to look at the personal returns and the business returns. I mean, it's really not that much difference when you're looking at evaluating the business and understanding the cashflow in the business and understanding what it takes to run the business.
Karen Covy Host
34:37
So, all right, let's say, hypothetically speaking, you know there's a woman and she's thinking of going through a divorce and she's in the situation you described, where she you know she let her husband do the finances. She did other things, she's a smart person, but she just doesn't have any financial knowledge. Looks like their marriage is crumbling. What would her first steps be? What would you recommend someone in that circumstance do?
Amy Colton Guest
35:05
Well, unfortunately, I think a lot of my clients fall into that category, and when I say that it could be, I worked on a case woman was she was the primary breadwinner in the relationship. She was the moneymaker in the relationship. She was the mother in the relationship, but she didn't take care of the finances.
35:27
Big mistake, though, because she relegated it or delegated that to her husband, who was the worst financial person I've ever come across. And then we got a lot of women who just are don't, don't, never handled it, don't understand it. They've signed tax returns, but they don't have a clue what's in the tax returns. Believe me, that's probably the biggest problem I see. Um then I had this woman didn't become my client, but she should have. Um, her husband wouldn't let her look at the tax return. And one time the CPA sent the tax return to the wife and he went ballistic because she wasn't supposed to see it. He didn't want her to know how much money he made.
Karen Covy Host
36:12
Yeah.
Amy Colton Guest
36:13
And he wanted her to sign the tax return, or maybe he just forged her signature, I don't know yeah.
Karen Covy Host
36:20
I've seen it go both ways in my time. We'll just leave it at that. But, Amy, this has been so helpful because I think what women need to hear too to your point. I've had many clients where the woman was the primary breadwinner but she still wasn't managing the family finances there is. There's nothing wrong with that, as long as you still understand what's going on and that you're not in the situation that the woman you described was, where her husband wouldn't let her see any of the tax returns or financial information. But it happens to everyone. It happens to so many people and really the key is getting an education and not being so embarrassed by the fact that you're in this situation that you don't get the help you need. What do you think?
Amy Colton Guest
37:09
I agree. I agree, it's very funny. A woman came to me a couple of years ago and she had reached out to her community and she says I want to find a financial advisor. but I want that one that's not judgmental. She ended up coming to me and and she was divorced.
37:30
So I hadn't worked on her divorce. But when she came to me, I found out that her ex-husband owed her about $30,000 because she I don't know how she missed it, but she did he was supposed to pay her based on child. He was supposed to pay her child support and a loan, and as the child support decreased, the loan amount increased. So she was always going to get paid the same amount of money, but what had happened is that the child support decreased because they had five kids and one of them or two of them had dropped out of the system, but he never gave her the extra money for the loan. And so you know I also. That's a document that I also now ask for when I'm working with people. If you're divorced, I'd like to see your divorce decree.
Karen Covy Host
38:20
Oh yeah, absolutely. That's amazing, but that's a discussion for another day. So, Amy, thank you so much for sharing your knowledge. I think it's so important, and I think it's important that people hear the non-judgment part of what you just said, because that's important. So many people feel ashamed that they don't know more, and you know that's not helpful. It's really not helpful. So, thank you so much. Where can people find you if they want to work with you?
Amy Colton Guest
38:51
My website is yourdivorcemadesimple.com. There's a lot of good information there. There's also a way to get in touch with me if you'd like a consult, and I do not charge for consult. So I encourage people to at least have a conversation with me. They'll learn a lot in the conversation.
Karen Covy Host
39:09
I am sure that they will. So you know for everyone out there listening or watching, definitely take Amy up on her offer and, if you enjoyed today's episode, if you'd like more content like this, please do me a big favor. Give this a thumbs up, like subscribe, and I look forward to talking with you again next time.
