How to get your financial information in order without a forensic accountant

Marriage is about love, but divorce is about money. In this episode, Jaime talks with Gabrielle Clemens, a certified divorce financial analyst. Gabrielle talks about how she helps men and women navigate the divorce process by ensuring that their divorce agreement is sustainable and viable for their lifestyle, and she emphasizes the importance of approaching divorce with a business mindset and understanding the long-term impact of financial decisions. Learn how to start with your financial affidavit or statement, which quantifies your lifestyle and expenses, to get control of your cash flow to avoid financial destruction in your divorce.

Need help from Gabrielle? Contact her by visiting www.gabrielleclemens.com, or check out her book.

While the information presented is intended to provide you with general information to navigate divorce without destruction, this podcast is not legal advice. This information is specific to the law in North Carolina. If you have any questions before taking action, consult an attorney who is licensed in your state.

If you are in need of legal assistance in North Carolina, contact us at Gailor Hunt by visiting www.divorceistough.com.

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Creators & Guests

Host

Jaime Davis

Family Law Attorney, Mediator, Author & Podcast Host

What is A Year and a Day: Divorce Without Destruction?

Board-certified family law attorney Jaime Davis and her guests provide information and tips for getting through a separation and divorce without destroying family relationships or finances. From marriage therapists and financial planners to private investigators and parenting coordinators, learn how to navigate divorce without destruction.

JAIME: Welcome to a year in a day. I'm Jamie Davis,

board certified family law attorney at Gaylor

Hunt. On this show, I talk with lawyers, psychologists,

and other experts with the goal of helping you

navigate divorce without destruction. Last episode,

I talked with Robert Nordlander, a forensic accountant

who helps his clients achieve the best financial

outcomes in divorce proceedings. In this episode,

I'm talking with Gabrielle Clemens, certified divorce financial analyst. Gabrielle and I are going to

discuss how you can get your financial information

in order on your own, if your divorce doesn't

require a forensic accountant or if you can't

afford one. Thanks for joining me, Gabrielle.

GABRIELLE: Thanks for letting me be here, Jamie.

Good to be here.

JAIME: So, tell us a little bit about yourself,

your career, and why you became a divorce financial analyst.

GABRIELLE: Sure. Well, I was a divorce attorney

and tax attorney prior to transitioning to financial

services. So I really like the practice of law.

I have a master's in tax. I did trust in estates.

And you never know what's going to happen in the

law and you never know what's going to happen

when you go to court. And I worked a lot in the

family law arena. However, when I had my first

son, who is now 25, going on 26, I decided to

transition to a reasonable work schedule, and

I wasn't at the mercy of court dates and deadlines

and things like that. So now I started out by

helping women go through the process of divorce

and understanding what their divorce agreement

was really saying and running the numbers with

them to make sure that the agreement that they

were signing was actually sustainable and viable

to them and their lifestyle, and also just to

make sure that they understood it. Back when alimony

was taxable, this was a big issue for people.

I had many people stating that they never realized

that their alimony was going to be taxable. They

were adamant that it wasn't. And sometimes it

was in the agreement and sometimes it wasn't.

So whether it's in the agreement or not doesn't

matter. The IRS wanted their money back then,

so we just wanted to make sure that they understood

everything. And that's how I started, and now

I help men and women go through the process.

JAIME: That's wonderful. And you've also written

a book, Marriage is about Love, divorces about

money. Tell us about your book.

GABRIELLE: Here it is. Marriage is about love.

Divorce is about money. It is my registered trademark.

And it's just sort of true. I mean, when you have

children and you're working out the parenting schedule, a lot of money flows.

It flows to your household, it flows to your lifestyle, it

flows to taking care of the kids, the medical

expenses, the extracurriculars, the college. Everything

about splitting a family is really about money,

and it's something that people need to understand

and approach that way. Put on your business hat

as you approach this settlement and understand

that this is probably the second biggest financial

decision that you're going to make in your lifetime

besides purchase of a home. So it's important

that people understand what the decisions that

they're making today, what the long term impact

is for their success in their financial future.

JAIME: Absolutely. In my practice as a family

law attorney, I found that folks can tend to get

a little short sighted, right? Like they're so

concerned with just getting through it that they're

not really thinking about making sure they have

enough money to take care of themselves and their

children for the long run.

GABRIELLE: Exactly. And in my practice, what I

do for attorneys like you is we run the numbers,

we do the financial plan, we run the numbers and

we say, is this sustainable? How are you going

to know whether or not you have a good settlement

or if it's good or bad or better or worse than

the last settlement proposal if you're not running

the numbers and seeing how this is actually going

to play out in the future?

JAIME: So for someone facing divorce, what should

you do first to get your financial information

in order?

GABRIELLE: Well, what I recommend is you start

with the financial affidavit or the financial

statement that's required in your case. So whether

you're mediating or arbitrating or litigating

you're going to need this document in order to

move forward through the court process and ultimately

get your divorce. Now what this financial affidavit

does is it walks you through how much is your

mortgage, how much is your brand, how much is

your insurance and it forces you to think about

these line items and what it really costs to be

you. What does it cost to be you in your house

with your kids or for college or your car and

what is your lifestyle and you quantify that.

So the first thing they need to do is really get

control of your cash flow. What's coming in, what's

going out, where is it going. And assets and liabilities

are relatively typically somewhat stable and they're

easier to pinpoint at different stages. Obviously,

if you're paying down principal in your mortgage

it's going to fluctuate in value a little bit.

But for the most part your cash flow is what your

support, your child support and alimony is going

to be based on. So the first thing to do is get

control of your cash flow and your lifestyle expenses

and then go into quantify what your assets and

liabilities are.

JAIME: So it's really just having a greater understanding

of what your monthly budget is. I know a lot of

folks, they think of the mortgage and the utilities

but they tend to forget those smaller things,

right? Like eating out school supplies for their

children, the field trip costs, all of those things.

And you're right, the financial affidavit is a

great way to make sure that they're thinking about

all of their expenses in total?

GABRIELLE: Yes, absolutely. And we have a new

term that we put into our financial statements

and it's called self care. The manicures, the

pedicures, the botox, all those things. Just wrap

that into self care. You don't need to tell the

judge exactly what you're spending on and what

that, because these are like some privacy. But

that's really important. And add that to your

spreadsheet, add that to your financial affidavit because that is money that you're spending. And don't feel bad about

it, just recharacterize it and call it self care.

JAIME: Right. If it was part of your lifestyle

when you were married, it gets to be part of your

lifestyle when you're separated too.

GABRIELLE: Exactly. Even more so you're going

to need more self care and more stress management

techniques and strategies than you did before.

Potentially.

JAIME: Absolutely. So we've determined the budget.

What are some of the documents that folks need

to find when they're first getting started in

this process?

GABRIELLE: Mortgage statement is very important.

So a copy of your mortgage statement that says

what the interest rate is, what the term is, and

what the monthly payment is, and what the current

principal is, your pay stub, your tax returns, your spouse's pay stub is very important. Your

health care documents, if you're on a particular

health care plan through work, getting some of

that information will be very important. To know

what your benefits are. Your Social Security statement,

go enroll if you haven't already onto Ssascurityadministration.com.

Get a copy of your Social Security administration

benefit statement. They don't send them out anymore,

so you have to go online and get them enroll in

there and get that. So your tax returns are very

important, as I said, the last three years of

tax returns, very important. Very helpful. Any

life insurance policies potentially with cash

value. So if you have permanent or even term life

insurance policies, those are important to get

a copy of the whole policy. Not just the coverage,

but the whole policy. So anything and everything

that goes on your financial statement is something

that you should be able to get a document and

a file put together to back up to corroborate

and to support those expenses. So anything you're

putting on a financial statement, you should be

able to get a corresponding document to show that.

JAIME: So what do you do if you're the spouse

who doesn't have access to the financial information?

GABRIELLE: Well, one thing I would not do is I

would not think about what the number should be

and put it on your financial statement. I would

put a one dollars on your financial statement

as a ticker just to tell you I don't have that

information. We're going to need to get that information

and you may need to subpoena the information if

your spouse isn't giving it up. Or you're just

going to have to come back to that, and your spouse

is going to have to produce that information.

But just don't put in any number thinking that

it's correct, because that could be a grave mistake in front of a judge

or to the other side, to your opposing counsel

saying that you can't document this number. Where

did you come up with it? And it just leaves you

open to scrutiny when you're really just trying

to be helpful by putting in information that you

don't have. So I would just put maybe a dollar

there just to show that you don't know that number

and ask your spouse. And if your spouse isn't

going to give it or you don't know where to find

it, you can ask the opposing counsel for that

information. Or worst case, you can subpoena it

from the institution, the company that you're

trying to gather it from.

JAIME: Yeah, a lot of times in these cases, when

we're trying to keep them out of court, but my

client doesn't necessarily have all the financial

documents. If the other side has a lawyer, which

hopefully they do, we reach out to that other

lawyer and we suggest, hey, let's participate

in a voluntary document exchange. I'll give you

my client's documents, you give me yours. And

that way everybody has a complete picture of the

couple's finances so that everybody can make an

informed decision about how those should be divided.

GABRIELLE: Right, but you're not always going

to get that cooperation. So for the less cooperative couple, a little bit more

high conflict. There are ways to get that if they're

not voluntary. I work with clients who have complicated

executive compensation plans, and we can't always

get the stock option schedule, and we just have

to subpoena the employer for it if someone's not

going to give it up.

JAIME: Yeah, absolutely. If the case is in litigation,

serving subpoenas or conducting discovery is a

wonderful way to get the information. And back

to the financial affidavit you had mentioned,

it was very important not to just guess at numbers

and to make sure that you really do have the backup

documentation. I was just going to add that when

we're in court and we see lots of round numbers

on that financial affidavit, we know that there's

probably not a lot of backup documentation to

support those numbers.

GABRIELLE: Yes, I agree. And so what do you do

at that point? Do you ask opposing counsel or

do you just accept it? I mean, what's your strategy

when you see that?

JAIME: Well, if I'm cross examining the other

side, I'm happy for them to have the round numbers.

We can poke all the holes in their expenses. I

would say that if it's my client, I would not

go into court with a financial affidavit that

looked that way. I would make sure that if it

was an estimate, that it was noted as an estimate.

And sometimes on our affidavits, we even add footnotes

that explain how the client arrived at the number.

For example, she doesn't know the cost of her

health insurance. So she went on the website and

pulled a quote. We'll say where she got the quote

from or things like that to show the reasoning

behind a number that may not be that there may

not be a document to support.

GABRIELLE: Yeah, absolutely. We do footnotes too,

in Massachusetts, and it's great. And we have

some practitioners feel as though certain judges

don't really read the footnotes. Other judges

do. So it all depends, right? That's what the first thing I say in

my book is. It depends.

JAIME: Absolutely. I find myself saying that all

the time in my practice.

GABRIELLE: Right.

JAIME: So once you understand what you own and

what you owe, what do you do next in the process?

GABRIELLE: Well, then you sit down with your attorney

and your client and hopefully the opposing party

and start to really flesh out what an asset division

is going to look like and determine whether or

not keeping the house or selling the house makes

sense. Can you afford to keep the house? What

do you want? In my book, I go through the process

for someone facing divorces, which is start from

the end and work the other way. Work backwards,

work forward so that you can actually envision

and develop a perfect day in your post divorce

life. What does that look like and how do we get

there from where we are now? So if you're okay

with selling the house, then where would you go?

Let's build about what we can tell a little bit

what the budget is going to be. Where would that

be? Can you stay in town? Do you have kids close

to college age? Are they already out of college?

Where can you go that you're going to find a home

that's going to make you comfortable or maybe

you rent? I mean, how great is renting for a few

years while you sort out where you want to be

and where you want to spend your money and your

resources. So the next thing is really to look

at a proposed settlement or get a guideline or

where you're going to end up and where we can

live. What can our lifestyle look like within

that framework, within those guidelines of your

potential settlement after divorce, and what's

going to make you happy?

JAIME: Do you ever find that you have to have

tough conversations with clients who really want

to keep that house? They're very tied to the house,

but, you know, financially that is not probably

the best choice for them.

GABRIELLE: Absolutely. And that's why we run the

numbers. And I don't say no. It's not my position

to say you can't do this or you can't do that,

but sure, you can keep the house if you want to

put this much strain on your cash flow, or if

you want to get a second job, or even a first

job if you want to not go on vacation. And we'll just cut the vacation budget,

that's fine, but you'll have a house. And then

we'll start turning and they're thinking, I don't

know, maybe this isn't such a great idea, but

I can't make the numbers do what they don't do

and I can't work magic. And especially most people

are very risk averse. So when I invest money,

then we have to be conservative because we want

to preserve those assets. So I have them arrive

at their own decisions based on the numbers, but

it is something that they have to come to terms

with.

JAIME: Can you share a story of someone who didn't follow

the steps you've outlined? What happened?

GABRIELLE: Well, it can be sad because when you

approach your divorce, the financial aspects of

your divorce emotionally, then you're not going

to make sound decisions and all you're going to

do is look at the projections in a rose colored

glasses and just say, this could never happen

to me. I did have a client that she spent so much

money on self care, plastic surgery, Botox, new

wardrobe, travel, trying to meet her next soulmate.

And I kept saying, okay, look at the numbers.

Now we're going into principal. Now we're starting

to really drill down on these assets and you're

going through your money. And she was renting

and her rent was going up and she just wouldn't

look at the numbers. She wouldn't focus on what

she had and what she was doing. She was very focused

on what was going to securing the next love of

her life. And unfortunately, she did fall in very

dire circumstances and she didn't understand what

happened to all of her money and she just literally

spent it. She went through it. So by not doing

a budget and not adhering to some kind of discipline

within the guidelines of your assets and your

income and not understanding the cash flow and

just think things are going to be different and

they're magically going to work out, it's folly.

I mean, it's just not necessarily going to happen

that way. And you have to be disciplined in your approach and pay attention to your finances.

And it was very sad. She ended up starting a dog

walking business, which was great. It was really wonderful. But as she got older and she couldn't walk through

the streets very easily with six dogs and it was

just not what she had been used to. So I think

if she had been a little bit more or a lot more

fiscally responsible, it wouldn't have had to

be this way.

JAIME: Right. I think it's really important, especially

for folks who are going through a separation,

to understand and appreciate the financial reality

of their situation. I mean, while they were married,

maybe they were able to put their head in the

sand and not really worry about the budget or

the finances and sort of spend however they wanted.

But once you're separated, you're in charge of

your money and you need to make sure that you're

being responsible so that you can make it last for your life expectancy.

GABRIELLE: Exactly. And you can do that. We were

running the numbers, she just didn't want to pay

attention. But to run the numbers, pay attention,

and understand how this is all going to play out

and revisit it every year, every month, twice

a year. This is your responsibility now. And it's

important. If you've made this agreement, it's

really hard to go back to modify it just because

you spent too much money. So life is always going

to throw us a curveball here and there. So you

want to make sure that you have money set aside for emergencies. And beyond that, you can live

a nice life, I'm sure, with what you have, or

get a job, or get a better paying job or a second

job. And you can move forward, but you have to

at least keep your eye on the ball.

JAIME: Absolutely. If you could only share one

piece of advice with someone going through a divorce,

what would it be?

GABRIELLE: Well, it begins with the attorneys.

And as you're hiring an attorney and you're working

with your attorney, I would just ask, do you have

time for my case right now? I know in the New

England area, attorneys, family law attorneys

are so busy, they're taking on cases. A lot of

them are with large firms. They want to take in

cases, but then they don't really have time to

give to your case. So one of the first questions I would ask when you're hiring an attorney, I would ask them,

do you have time for my case? What is your response

time? Will I expect if I send you an email or

a phone call? How soon will I hear back from you?

This is really important and this is a critical

relationship between you and your attorney and

you understanding how they operate and how they

work and where you fit into that and where they

fit into your life. This is your one attorney.

Your attorney has 6100 cases, I don't know how

many. And you want to understand that they do

have time to focus on your case. And it's okay

if they don't have time. It's okay if they say,

you know what, I'm not going to be able to focus

on this. I'm not going to get back to you in 6

hours with your six page email asking me to reiterate

the law on child support. It's okay. But it's

a relationship that you have to be comfortable

with and how they operate and how you operate,

what your needs are. And this happens throughout

the divorce process. So you can stay in sync with

your attorney because it's really expensive and

time consuming to change attorneys mid case. And

we try really to stay away from that by making

the right choice first. And part of the right

choice is knowing you're going to get the service

and the attention that your case deserves.

JAIME: I think that is a wonderful piece of advice.

And I will tell you that is one of the reasons

why my law firm uses a team approach to cases.

We have at least two lawyers assigned to every

case in our office. That way, if the client calls,

there is someone there who knows who they are,

knows something about their case, and can help

them if the lead lawyer is in court or mediation

or wherever else they might be. So I could not

agree with you more on that point.

GABRIELLE: Yeah, that's great case management.

And, Jamie, not everybody does that. Not all law

firms do it. And it's difficult for a client when

they call and they're talking to different people

all the time, trying to explain, and then that

person, that new person has to pull the file,

go through the file, get up to date, and answer

the question. Because you can't just answer a question without knowing the circumstances, how law works. That's not how

family law works. So I like that about your firm

and you and your practice, and I think your clients are very fortunate to have that because that's not

always the case.

JAIME: Well, thank you. If one of our listeners

is looking for help from you and their divorce, what is the best

way for them to get in touch with you?

GABRIELLE: They can call me. My number is 781-910-4770.

You can Google me. I'm in Boston. You can google

me and call me at the numbers placed there. You

can look at my book. There's a website, www.gabrielleclemons.com.

But start with my book. It's a great little book.

It's a guide. It's formatted to approach your

issues before, during, and after divorce, because

there are a lot as you know, Jamie, there are

a lot of post divorce issues. Estate planning

you have to do, how to file your first tax return as a single person or a head of household is a big

deal and a lot of nuggets in there.

JAIME: Well, your book sounds like a wonderful

resource for people. Thank you for sharing that

with us.

GABRIELLE: Thank you. Thank you.

JAIME: Jamie and Gabrielle, thank you for joining

us. This has been wonderful.

GABRIELLE: Well, I appreciate it. Thank you. Good

to see you, and best of luck to everybody.

JAIME: Thanks, Gabrielle, for joining us. And

thank you for listening. If you like this episode,

be sure to follow the show wherever you get your

podcast so you don't miss the next one. While

this information is intended to provide you with

general information to navigate divorce without

destruction, this podcast is not legal advice.

This information is specific to the law in North

Carolina. If you have any questions before taking

action, consult an attorney who is licensed in

your state. If you are in need of assistance in North Carolina, contact us at gaylorhunt by visiting divorcestuff.com. I'm Jamie Davis,

and I'll talk with you. Next time on a Year and

a Day

GABRIELLE: close.