MONEY & MATRIMONY LLC CERTIFIED DIVORCE FINANCIAL ANALYST Certified Financial Planner Mediation training: UH Law School CDFA What I don t do 2 Patricia Barrett CFP CDFA 1
INTIMACY Physical & Emotional Financial relationship Different ideas Scheduled Meetings Goals and dreams Partnership for new life Trust Enhanced 3 FINANCIAL INFIDELITY Major Purchases without discussion Hiding Purchases Separate Credit Cards Keeping secrets Chip away 4 Patricia Barrett CFP CDFA 2
HOW YOU CAN HELP Neutral Financial Planner Avoid Surprises Avoid Arguments After the honeymoon 5 FINANCIAL MARITAL COUNSELING Financial situation Assets Debts Income Spending habits Goals for the future - Savings Separate Property Identified 6 Patricia Barrett CFP CDFA 3
BENEFITS OF SHARING Closeness enhanced Trust generated Ability to Plan enhanced Up-to-date list of Separate Property 7 BOTH INVOLVED FINANCIALLY Bill Paying Investments Budgeting Progress toward goals Regular monthly meetings 8 Patricia Barrett CFP CDFA 4
MONEY CAN BRING Power Pain Happiness Positive Attitude Mingling 9 Separate Property Bring into marriage Inherit during marriage Receive as a gift during marriage Appreciation on these 10 Patricia Barrett CFP CDFA 5
RETIREMENT ACCOUNTS Defined contribution (401k) IRA Defined Benefit (Pension) Annuity Keep all statements 11 MARITAL PORTION OF PENSION Employed 20 years Married 10 years Prorated amount ½ of ½ = 1/4 COVERTURE FRACTION 12 Patricia Barrett CFP CDFA 6
Community Property Property acquired during marriage Income from separate Presumption 13 How Mingling Occurs Mingling Paycheck into Separate account Separate funds into community Reinvested dividends or interest 14 Patricia Barrett CFP CDFA 7
TRACING Appreciation on Inheritance Line by Line tracing All statements needed Expensive 15 TRACING EXAMPLE Account with Mom Continued gifts 30 year marriage Husband Under-employed Reinvested Dividends Frequent Withdrawals Community Out First 16 Patricia Barrett CFP CDFA 8
FINANCIAL PLANNER ASSISTANCE Separate Property Income Dividends and Interest Second account Appreciation on Separate 17 UNTIL DEBT DO US PART Credit reports FICO Score Plan how to repay Community Income Child support 18 Patricia Barrett CFP CDFA 9
REIMBURSEMENT Separate debt Paid with Community Income Reimbursement to community Child support not reimburseable Good records needed 19 Home Owned Prior Home is always separate Can be gifted Remodeling Can cause reimbursement 20 Patricia Barrett CFP CDFA 10
Existing Mortgage Payments made Reimbursement Good records needed Closing documents Mortgage statement Receipts for improvements 21 Home Bought During Community Property Source of down payment Possible reimbursement Exception in some Cases Put in both names JTWROS 22 Patricia Barrett CFP CDFA 11
Your Business If begun before marriage New Spouse as employee If started afterward Corporate documents Loans from Community 23 PRENUPTIAL AGREEMENTS Not Positive Experience Require two attorneys Possible lack of commitment Possible reluctance to share 24 Patricia Barrett CFP CDFA 12
Prenup Uncommon After more than 500 cases Most of them millionaires Only one pre-nup Four hours before wedding 25 ALTERNATE TO PRENUPTIAL AGREEMENTS Laws for separate property Balances on date of marriage Avoid Use for community Coverture fraction Home or business owned prior 26 Patricia Barrett CFP CDFA 13
WHEN PRENUP NEEDED One has much more money One is giving up a paycheck Children from prior marriage Case Study: Doctor s second marriage 27 REASONS FOR INVALIDATION Fraud Failure to disclose Lack of attorney Physical duress 28 Patricia Barrett CFP CDFA 14
CHILDREN FROM 1ST Child support or Alimony Obligation of estate Last Will and Testament Beneficiary designations Life Insurance Texas and Federal laws 29 INCENTIVE COMP Stock Options Restricted Stock Separate Interest Formula in Family Code Keep table in your file 30 Patricia Barrett CFP CDFA 15
EXECUTIVE BONUSES Payment for Prior Year Part Community Part Separate Apportioned Add to Separate Property Account 31 BONUS APPORTIONED Bonus of $100,000 000 paid in 2017 Married 9/30/16 ¾ is Separate Property $25,000 is Community $75,000 is Separate 32 Patricia Barrett CFP CDFA 16
Ways to Own Property Sole ownership Step-up in Basis JTWROS Tenants in Common Children from prior 33 HOMESTEAD LAW Texas Law After first death Life Estate in Home Must pay expenses Except insurance Home repairs 34 Patricia Barrett CFP CDFA 17
ESTATE PLANNING for MARRIAGE Will should be revised New executor named Beneficiary designations Life insurance 401k & IRA Annuity Powers of attorney revised 35 TRUSTS Revocable Lifetime Trust Irrevocable Trust Testamentary Trust 36 Patricia Barrett CFP CDFA 18
Budgeting for New Life Detailed Budget Sources of Income Cost of new home Joint account for household Discretionary spending 37 FROM MINE TO OURS Separate Bank Accounts? Joint Accounts, (new mindset) Checking Savings (Goals) Fun Account Community Earnings 38 Patricia Barrett CFP CDFA 19
Agreed-upon Goals Joint Agreed-upon Goals: Short term goals Emergency Fund, Vacation Mid-term Goals New Home, car, college Long-term Goals Retirement t Children of prior marriage 39 SUMMARY Keep good records on Assets & Liabilities Set up file on home purchase Have regular financial meetings Open Communications about Money Set Mutual Goals 40 Patricia Barrett CFP CDFA 20
SUMMARY (CON T) Open a second account Spend community funds Don t Mingle Avoid financial infidelity 41 MANAGING MONEY & MATRIMONY 42 Patricia Barrett CFP CDFA 21