By Ronnie Thompson
On Divorce
Things to be conscious of when “Consciously Uncoupling.”
You may remember the first time you heard the term “conscious uncoupling” when it was used to describe the reason for Gwyneth Paltrow and her then-husband Chris Martin, lead singer from the band Coldplay, getting a divorce back in 2014. What many of us don’t know is this term was coined by Katherine Woodward Thomas, the US psychotherapist who advised Gwyneth Paltrow during that time. When asked about the idea behind the term Woodward described it as a better way to describe a relationship ending with “goodwill and respect.”
No matter the term used to describe divorce, or the amount of goodwill and respect involved it remains an incredibly difficult, emotional, and stressful situation for anyone to go through. 1 in 2 marriages ends in divorce in the United States. We are all a “coin toss” away from this situation happening to us and that proposition is as scary as the situation itself. Divorce is far-reaching often affects more than just the two people involved and their possessions. Family, friendships, children, business, real estate, income, assets, and retirement are a few things on that very long list.
So how do you navigate the choppy waters of divorce? How do you make good, educated, and unemotional decisions in an incredibly emotional environment? Here are 4 areas to understand and consider when going through a divorce.
Division of Assets – Any assets you owned during the marriage will be split “equitably” between the spouses. “Equitably” is a discretionary term to be decided by the court based on the specific variables of the two involved, however typically the courts look to make 50/50 splits of any marital assets. When it comes to “pre-tax investments, 401K’s, and IRA’s, you will need a separate document called a QDRO (pronounced ‘quad-row’) which is created to properly split these assets avoiding a taxable event. Division of Debts – Like “Division of Assets,” debts created during the marriage will be split “equitably” amongst the two individuals involved.
Children – If children are involved there are several areas of consideration the courts will decide on including Custody and Child Support. With regards to custody, this is broken down into two categories, Physical and Legal. Physical is the decision on where the children live during what times. Legal refers to who is making decisions for the children and when. Child Support refers to the exchange of monies to cover the costs of the children. There is a software program that inputs data like custody time, income, and other support obligations that will rate each person on a scale of 1-10 which will then provide a “recommendation” for support to be paid.
Spousal Support (Alimony) – Like Child Support, Alimony is calculated in a software program that includes things like income, “ability to earn income,” education, age, and duration of the marriage to name a few. This will produce a rating on a scale of 1-10 which will produce a “recommendation” for alimony, if any, to be paid.
It is crucial that you surround yourself with professionals that can educate and guide you through this process. When it comes to your assets it is important to be prepared with understanding and options even before you ever even step foot in the courts. With so much discretion the courts have in making these decisions for you and your family being empowered with the knowledge of the process’ to expect and the options you have is paramount to how it all ends up.
Most people who have experienced divorce rarely receive advice outside the scope of an attorney who is going to advise on only the things under the law and what the divorce decree stipulates. When it comes to the finances it is important to understand how these things will affect you prior to the decisions being made. The proper process of splitting those assets and its effect on your short term and long-term plans are rarely ever discussed during the legal process of divorce.
The terms we come up with to describe divorce does not change the fact that it is messy, and it will dramatically alter the trajectory of the lives of the people who are directly involved. If you decide to “consciously uncouple” make sure you are extremely conscious of your options, decisions, and the people you have in your corner advising you. It will mean the difference between your expectations and reality.
Ronnie Thompson and Steve Wilbourn are investment advisory representatives of and provides advisory services through CoreCap Advisors, LLC. True North Advisors and CoreCap Advisors are separate and unaffiliated entities. Securities trades are not accepted through email, voicemail or fax. Please contact your representative at the number listed above to place any securities trades. This e-mail message and any attachments are solely for the confidential use of the intended recipient. If you are not the intended recipient, notify us immediately by return e-mail and promptly delete this message and any attachments from your computer. These independent views and opinions expressed are those of Ronnie Thompson and Steve Wilbourn and are not necessarily the opinions of CoreCap Advisors. Investing involves risk and investors may incur a profit or a loss. Any information should not be deemed a recommendation to buy, hold or sell any security. You should consult with a licensed professional for advice concerning your specific situation. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ. The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market.
