Douglas Goldstein: Ted Jenkin has actually been in the financial planning business for
22 years.
He has also set up a company called Oxygen which serves the X and Y generation in terms
of financial planning.
One of the things I want to touch on which is something
I think that for better or for worse you do deal with a lot which is the financial issues
related to divorce.
Now I know it’s not always a popular topic because everyone wants to push it under the
rug but the reality is that people are dealing with it all the time.
Tell us some of the important financial things people should remember if they are getting
involved in a divorce.
Ted Jenkin: There are a lot of moving parts if you get a divorce but I will tell you there
are three important things to be thinking about.
Number one is to make sure that you know where your credit is at, a lot of times when spouses
get married, all of the credit may be in one person’s name and at another person’s
name and that could affect one of the spouse’s opportunity to actually get credit when they
get divorce.
Two is do you know where all the assets are, it’s very interesting when people go to
the process of getting divorce that there may be assets that were hidden or how they
were titled and sometimes spouses just don’t know where all the money is.
Three, know where the beneficiaries of all of the policies and retirement plans and that’s
an important thing to know.
Sometimes spouses don’t even know who is on the beneficiary for what.
Douglas Goldstein: We were representing a woman who had gotten divorced and she said
“Yeah my husband handled all the money” and I said “That was fine” and she said
“But we split everything” and then I said “Are you sure it was everything?”
she goes “Yeah even that account from Switzerland we split” and I said “Are you sure?”
and it turned out that because the divorce was still going on all of a sudden she mentioned
it and you know when someone is hiding money offshore then you really have to worry.
Ted Jenkin: That’s true and also when you are dealing with business owners especially
who get divorced, valuing a business could be very difficult because a lot of times in
those divorces most of the money is actually in the value of the business and that’s
something that you really, if you get divorce you got to make sure you’ve got a fair evaluation
to business, this is another thing to watch out for.
Douglas Goldstein: How would you recommend someone even start thinking about that?
Ted Jenkin: I recommend you know well, it depends who I’m representing but I’d recommend
that both spouses get their own separate evaluation of the business because the one spouse that
owns the business will tend to devalue it and the other spouse that doesn’t own it
might try to have a higher evaluation but you either have to agree on a common evaluator
or get your own evaluations and then come up with a fair market evaluation but that’s
a very, very important thing because I’ve seen certain people get divorced and get swindled
really out of a lot of money to a devaluation of the business.
Douglas Goldstein: In the one hand we often try to encourage people to have joint accounts.
You say “Listen, you are married, you are brining your life together and it’s time
to bring your financial assets together too.
And on the other hand, there is the reality of the real potential for divorce.
How do you address that with clients maybe when they are still getting married?
Ted Jenkin: It’s really interesting question because I’m in the X and Y generation and
there are lot of gen-X’ers now that are getting married for the very first time later
in life.
Not only men but women that have built up their own financial assets and so I do recommend
getting started slow, you want to have one join account so you can have some financial
commonality together, start to learn how to be able to talk about money and share assets
but I’m not actually a big fan that later in life that you get married to put it all
in a joint account for start.
You start slow, you develop some behaviour and commonalities together and then you can
figure out how to merge family finances in a more sincere way.
Douglas Goldstein: When a couple finds themselves getting divorce they end up going in and out
of court and they have legal fees which can really run up to and wipe them out.
What’s the best way to avoid that?
Ted Jenkin: The most funny thing in all the years of doing this is talking to men, especially
men who say “Yeah, I’ve talked it out with my wife and she is happy and I think
it’s good to be pretty easy to get this done” and that’s when I started to hit
the laughing button becomes it’s never easy to get it done.
If you can find yourself a mediator and you can mediate it yourself that will save you
a lot of time, money and energy and potentially impact on your children if you have them but
if you are not going to have a mediator and you have separate divorce attorneys, I don’t
think there is going to be any simple way to avoid arguing, there is always something
picky in what I’ve seen in the last 25 years.
Douglas Goldstein: Let’s dive a little bit further about when people are getting married
and they need to begin to plan for the future, do you recommend that they sign a prenup?
Ted Jenkin: The fact is that I think it really depends apart from your financial situation
,the more assets that you have, the more that this subject of having a prenup is going to
come up and like I just said this is not just to of men but you have now women that are
now 35, 40, 45 years old that may be getting married for the first time that had built
a million dollars of assets in their own name and so yes, I do think a prenup can be effective.
There are also a lot of couples today that are same sex couples and if they are done
correctly they can be effective, you got to have somebody that really specializes in doing
prenups, they know the laws in your particular state and they can be effective, you just
have to decide how much you want to potentially hit the emotional baggage when you set them
up because sometimes a spouse will say “Yeah, I’ll be okay with it if we have a prenup
but the truth is they won’t so I find up that it ends up being more of an emotional
conversation and it really does a financial conversation.
Douglas Goldstein: But ultimately is it effective?
In your experience does it work out and solve the problem?
Ted Jenkin If they are done right from a legal, technical goal, financial perspective yes
they can work.
Have I found that it makes a solid marriage, no.
No, there is always deep harbored feeling about money and they always come to the surface.
Douglas Goldstein: When you do financial planning for someone who is divorced or about to get
divorced, how does that differ from when you are working with let’s say a married couple?
Ted Jenkin: There are a lot more moving parts because some people are divorced and they
are still unmarried and then where it gets more complicated is that they’re divorced
and then they get remarried and you got to consider what’s happening with things like
child support or alimony, you know as it pertains to both their cash flow and how potentially
it can affect their income taxes, you have to consider what’s going to happen to things
like college education planning, will be ex-spouse or husband or wife pay for it?
Are you going to have to pay for it?
Did the divorce documents specify what would happen?
You have to consider what’s going to happen with the insurance, are they insurance policies
still have beneficiaries where you, the ex-spouse are on the policy or has that changed?
So you have more moving parts to ask around the financial plan than you would just a single
individual or married couple.
Douglas Goldstein: It’s always seemed to me that the clients that I work with who are
divorced, they are always going back to their ex-spouse, they are never done, there is always
a continuing negotiation literally for years, is that your experience as well?
Ted Jenkin: It’s funny that a spouse may be getting $1500 of alimony or child support
and then you like hear the husband a few years later say “Oh I know she got a good job
now and she is hooking up with some guy that’s got a lot of money, I got to go back and talk
to her and see if I can knock this down to a $1000 a month” and you are absolutely
right, it happens all the time.
Now I will say I’ve seen some cases where there had been child support or alimony and
the other spouse after the divorce has done well and actually gives the other spouse more
money so I’ve seen it work out both ways in the negotiation side.
Douglas Goldstein: You mentioned something about social security and I know it is very
important how people get spouse social security and even that it’s available to them if
they are divorced, can you give us some description as to about how that works and what are some
of the risks?
Ted Jenkin: The big question is whether or not you are going to be married for 10 years
you know and if you are married for 10 years or more, you might be eligible to collect
some social security even if you get divorce from your ex.
This is also funny as a side note depending upon the state you live in and the alimony
you are going to get, most states will have like a three for one rule that you might get
one year of alimony for every three years that you are married but it’s very important
because there are a lot of ex-spouses that were married for 15 years and then they get
divorced and then they are doing their own financial plan as a single man or a woman
and they may not even realize that they are eligible to collect social security down the
road from their spouses.
Douglas Goldstein: How can people learn more about you and follow your work?
Ted Jenkin: If you want to get a brochure on five financial mistakes to avoid a divorce,
just go to www.oxygenfinancial.net, we will get you a free brochure that you can look
at so you can help yourself for your future, you can always follow us on our Twitter handle
@oXYGenFinancial.