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Topic: Things to Consider From a Strategic Point of View if You’re Getting Divorced (Read 792 times) previous topic - next topic
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Things to Consider From a Strategic Point of View if You’re Getting Divorced

Choosing an Attorney
When I went through my divorce, I shopped for ONE THING: I wanted a SOB. A good friend advised me with great wisdom. Most people make the mistake of getting a mellow or “nice guy” attorney to represent them. This is a fatal flaw, and you won’t realize that flaw until it’s obviously too late. Find an attorney with a reputation for being a complete asshole, pay the fee, and hire them. When you run the tables and win? You can be as magnanimous as you like, but you can’t win with a loser.
 
When you hire an attorney, you’re using a retainer to pay them for their services. Anticipate refilling it from time to time during the 1-2 years this sucks out from your life. Avoid using your pension money to cover this as it will likely trigger taxes and pre 59 1/2 10% penalties. Do you own cash value life insurance? Take a partial withdrawal and/or policy loan. Be sure to PLEDGE the policy as security for the loan vs. borrowing the cash value directly from the contract values. This allows maximum account growth while solving your financial problem. Life insurance loans are non-recourse - You can pay it back later.

All that said? Nothing shuts down an attorney faster than you not promptly refilling a depleted retainer account. Towards the end of your divorce, be prudent about refilling it. Ask for an estimate of the hours remaining as when it ends? You’re silly if you think they return unused retainer. (That’s actually funny) 😉
 
Get a Divorce Advocate.
I was finally divorced in 2000; it took me two years, and I ended up with my daughter at age 10, and saw her through college. Fortunately, I had a momentary flash of brilliance, and I contracted the services of a “Divorce Advocate”. She wasn’t an attorney, but her words were remarkable and true. She said, “Danny, you don’t know if you’re on foot or on horseback, and having someone who isn’t your attorney or an attorney at all will provide you perspective and watch your back for you.”
 
Truer words were never spoken. Your Divorce Attorney is every bit the black hearted beast that you think they are; your gut-hunch is correct. Silly things like negotiating terms of the service, retainer, hourly rate, billable hours constructs are all negotiables. Shop for what you want, but do not let “affordability” make the decision. An advocate has a better bit of leverage than you would have alone.
 
Additionally, Attorneys use retainer to pay their bills. An advocate will likely see the games they play to manipulate your retainer like getting into pissing fights with your Ex and running “FAX/email wars” between counsel to run up the tab. They will stop that sort of expensive nonsense and get you more value per hour. Attorneys will typically continue the battle until you run out of money, and the more efficient you are in the front will keep you in a better position to get the kind of settlement you prefer.
 
What does an Advocate cost? That’s very open. Mine worked for a percentage of what I saved from her counsel. It was a HUGE chunk, but, I would rather pay it to her than pay it to my spouse, and my spouse would have taken A LOT more. I would avoid a retainer or hourly services, as they can be paid for being incompetent. And lazy.
 
If You’re 55+ and you’re getting the house?
GET A REVERSE MORTAGE. Especially if you live in Hawaii; as being able to come up with the debt-to-income ratio needed to qualify for a refi is not likely, and regardless of whether you’re keeping or buying? Interest rates for conventional 30 yr fixed rate loans is not very pretty, and it’s going to get worse for another year or two. A Reverse Jumbo HELOC (unless you’re over 62, and you can use the FHA reverse HELOC) can be a VERY cost efficient way to buy out your ex, and simultaneously ELIMINATE your mortgage while providing you with a zero-cost mortgage tax deduction that can save you $15/25,000 per year in income taxes. A Reverse Jumbo with HELOC (NEVER use the fixed rate reverse as there is nothing you can do with it and it’s of no value for you after it closes, and it also limits the available equity to you by 24-33%). You can reduce the size of your loan by asking for a higher margin. This method has the additional benefit of creating a higher accumulation in your HELOC acct. When rates fall? You’re Fixed rate is still at the high fixed rate. The adjustable rate will go down correspondingly. Since the mortgage has no monthly payments? You free up THOUSANDS of dollars for income that you can sock away for your future financial needs instead of throwing away thousands on useless mortgage interest that costs a dollar to save 20 cents. The mortgage interest in a reverse is also deductible, and can be used to create a 1098 at no cost to you in equity or in mortgage payments. It's just THAT much better for you, especially during this time in your life.

Using a reverse mortgage will also improve your credit by eliminating the ened to make mortgage payments. It's not uncommon to see FICO scores raise by over 100 - 150 points. The most important thing to keep in mind is to do the reverse while your credit is good. Don't kid yourself into thinking you can keep up, fall behind, and kill your chances of getting into this federally insured program.
Bottom line? Poor economic practices and habits can financially destroy you, and there is no more equitable way to finance debt than a reverse. Surviving a divorce is better than merely getting through it.
 
Another valid concern is your overall debt-to-income ratio (DTI). With a reverse, your DTI is very low. If your car need repair or replacing? A low DTI means you can get a car loan much easier than you can while carrying a $2-3,000/mo mortgage payment. You can afford repairs. You win.
 
You can also let the non-recourse HELOC substitute for your need to build an emergency fund. You’ll be less likely to use the HELOC (trust me!) than you would be at dipping into your savings. The Jumbo HELOC programs typically offer 1.5% equity line growth without needing to refinance, a handy benefit.
 
***If you use the reverse, you won’t have a mortgage payment, so you’ll have the needed funds to…
 
BUY LIFE INSURANCE ON YOUR SPOUSE
...and avoid term insurance if at all possible. Why? Yes. It’s very cheap. But, it’s also very expensive. Policies today are very different from the policies we knew growing up. If you have children and depend upon child support, If the Spouse dies, the death benefit pays. What if the spouse is injured or suffers substantial illness and loss of income? You can't get blood out of a turnip, can you? If you disagree with this because you're so angry that punishing the Spouse during a time when no earnings are possible? Is it more important than heading off the problem? Then we know why you're getting divorced.
Remember - If this means the children don't suffer? It's a morally correct thing to do.
They now have a wonderful advantage in divorce settlements due to “Extended care" benefits found in contemporary policies. The numbers for people over 50 are staggering: 70% of us will require long term care for a minimum of 6 months to 3-5 years (especially if younger). This “statistical viability for doom” enhances the value of the permanent contract by offering an indemnity function that is paid to YOU if your Ex suffers a debilitating illness or accident that prevents them from being able to do 2 out of 6 care functions: Toileting, feeding, transferring, walking, bathing, or clothing. ANY TWO. ONLY TWO, and the Ex is evaluated medically and a portion (significant in many cases) is paid to YOU (as the policy owner), tax free.
 
Also, it’s a distribution, not a loan, and need not be repaid. It may interfere with government benefits you get for food, shelter, etc, but if you have a reverse HELOC, you can simply pay that onto your debt as a mortgage payment (DO NOT pay the loan off); simply pay it down, as, if you pay it off, the HELOC is closed, you lose access to you equity line, and you’ll need to refinance another one to get it back. Otherwise, You may use the  as you see fit.
 
Get life/health insurance for yourself.
Establish a trust for the protection of your children/assets should you become disabled or die. If you’re a Christian, you can obtain wonderful coverage through “Christian Healthcare Benefits” based in Barberton, Ohio.  The premium is about $200/month per person (max 4 lives), and has a ZERO deductible and no copay.
 
GO BACK TO CHURCH (or continue if you’ve been going).
The Church/The Body of Christ will heal your hurting soul. The Body will help you see your flaws and help you make needed changes so you can move forward in your life. It takes two to tango. No one is perfect; no one is innocent; you both contributed to the failure of your marriage. You may be angry at his/her actions, but work on what YOU did to compel or cause the failure. If you can be honest with yourself, growth from this is a wonderful testimony to the grace of God.
 
If the Church you attend is condemning you? Hateful? Find another church.
 
WORK WITH FINANCIAL ADVISORS 
Avoid sales oriented professionals; you need a “Fiduciary”. A fiduciary is legally committed to only recommend and advise you in matters of your best interests first and foremost. As a Fiduciary Advisor? If I don’t represent you as a priority? I can lose my licenses, go to jail,  and be banned from ever working in this business for LIFE. As a matter of my own practice? I hire an advisor to manage my investments so I can be totally committed to you. How can I say that you are my priority if I’m also managing my own investments? It may be very convenient, but It’s disingenuous to say otherwise.  I cannot have a conflict of interest if I pay someone to manage my wealth, and that’s what you should expect.
 
When I went through my divorce, the County I lived in required my Ex and I to attend “divorce course” to give us a preview of what’s to come in the hope of changing our minds. One thing they said I’ll never forget – “A divorce turns a prosperous family into two broken and impoverished ones”. If you can reconcile? You, your Ex, and your children will all be much better off. But, if that’s not possible? End this and get it over as soon as possible for the sake of you, and your children, and even your Spouse. It’s the ultimate example of tearing off a bandaid quickly rather than slowly. If you think you need to punish your Ex, do it with prosperity, not anger.  Just keep in mind - "No one 'wins' in a divorce; there's just varying levels of losing."  Also, try to refer to your Ex in front of the Children as “Dad” or, “Mom”; not YOUR FATHER. YOUR DAD. YOUR MOTHER. Trust me, your children know that you’re divorced, and they’re deeply hurt by this regardless of what you think. Don’t complain about them, or rehash your issues with them; they’re not good listeners, they’re trapped and you really can punish your children with your anger because, at the end of the day? And 30 years from now? You’re never really divorced from them (especially) if you have children.
 
 
Daniel J Turner, Principal Advisor
Akamai Wealth Management, LLC
1088 Bishop St. Executive Centre Ste 3007
Honolulu, HI 96813
808-691-9200 office
808-464-5292 direct

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Daniel J Turner, Principal Advisor
Akamai Wealth Management, LLC
1088 Bishop St. Executive Centre Ste 3007
Honolulu, HI 96813
808-691-9200 office
808-464-5292 direct


Advisory services are offered through “Akamai Wealth Management, LLC”. (AWM) a registered Investment Advisor registered in the State of Hawaii.

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