Money Rehab with Nicole Lapin - How to Get Divorced without Losing Everything

Episode Date: July 1, 2023

Originally aired 3.31.22 What do Kim Kardashian, Angelina Jolie, Christina Aguilera, Johnny Depp and Dr. Dre have in common? Other than being mega-superstars, they were represented in their divorces by attorney Laura Wasser. Today, she gives you super divorce advice for free. Spoiler alert: this is one of our favorite episodes. You can read more about Laura here: https://wcmfamilylaw.com/laura-wasser/ and here: divorce.com 

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Booths are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

Hey guys, are you ready for some money rehab? Wall Street has been completely upended by an unlikely player game stop and should i have a 401k because you don't do it no i know do you think the whole world revolves around you and your money well it doesn't charge for wasting our time i will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Pop quiz.

What do Kim Kardashian, Angelina Jolie, Christina Aguilera, Johnny Depp, and Dr. Dre have in common? Other than being A-list megastars, they were all represented in their divorces by attorney Laura Wasser. And today, she's here to give you her advice for free. And now we can say we also have something in common with Angelina Jolie. But seriously, I know it's not fun to think about divorce if you're married. Hell, it's not fun to think about divorce if you're married. Hell, it's not fun to think about divorce if you're getting divorced either. I think it's safe to say it is never fun to think about divorce. But it is so, so important. You remember episode 79 with a listener who had lost everything in a divorce?

So listen to Laura, and that won't happen to you. Laura, I'm so excited to welcome you to Money Rehab. Thank you for having me. You are such a boss. You are the boss bitch. I wrote that book, so it's a compliment in your field. You've helped so many women, so many people through really difficult divorces. You wrote the book called It Doesn't Have to Be That Way,

How to Divorce Without Destroying Your Family or Bankrupting Yourself. And that is essentially what I want to talk to you about today. So how do you divorce without destroying your family or your finances? I know it's a huge question. I guess let's start in the beginning. If someone wants to get a divorce and hasn't talked to their partner about it yet, what should their very first step be? I really think the very first step should be to have a good picture of your financial situation. And we really, now taking kids out of the mix just for a moment, the four corners of a divorce

are gonna be what you have, what you owe, what you earn, and what you spend. And in almost every state, that information must be exchanged by the parties so that you can figure out how to divide it up and how to come up with an appropriate support amount if one person's making more money and contributing to the other person's support. So that's the first thing you should do. If that's not possible because your spouse has always been the one that's been in control of the money, it will become discoverable during the divorce. So if you can't do that, I've had clients say, I went into his office and I took pictures of all these documents with my special shoe phone and whatever. And I'm like, you don't even do

that. We'll get that information. Burner phone's not necessary. But that is very important. If you can't get that information, then the first step would be, or if you can, then the second step would be finding out what the law is in your state. Are you a community property state where everything that was earned or created during the marriage

gets split right down the middle? Or are you an equitable distribution state where it depends a little bit more on who earned what and who did what. And the judges will hear more information about it. I will say this, Nicole, in every state, it is going to be easier if the two of you can figure out a way to come to some kind of a resolution, whether attorney assisted or not. And one of the things that we talk about a little bit in the book and then really blew up after is online divorce services, people that can do it online.

I work with a company now called Divorce.com. Even if you don't end up doing it through an online service, you can get so much information about what might happen if you went to court, about what the best outcome for you would be if you go online on any platform. But certainly I'm going to divorce.com because they're awesome. I mean, it's also a great URL. I wonder how much that was. It was a lot. But I really want to zero in on something you said, where oftentimes one person handles the finances in a household. And let's be real, normally that's the man. I mean, this is why I write many books and hope

that changes soon, but it's just not often the case. I hear from women after they get their divorce is when they have to get their financial lives together. Do you hear that a lot? Like the remorse of not knowing more while the marriage was still intact? Totally. And again, I live in a town, which is a small town, but it's all show. So you've got a ton of people that are driving Maseratis and living in expensive homes and sending their kids to expensive schools and going to expensive restaurants and shops. And yet they really might not have that much money.

And so, so often I will see the outspouse, the person who didn't make the money or control the money, saying, I thought we were fine. And I didn't realize that we didn't have any money or that he had been putting it all into an account that was growing from a separate property or whatever else. And so it really does. I mean, I speak all the time to women's groups about kind of how we so often abdicate our financial sense of knowledge. And, you know, even when we've got

dual income homes, even in situations sometimes when the woman is the breadwinner, she's like, you take care of that stuff, honey. I don't want to balance a checkbook. I don't want to know. And then for the high net worth clients, you meet with the business manager. As long as we have enough money, I'm fine. And I always say, get in there, get in there with the business manager that they have a fiduciary duty to you to get information. Not only could it actually keep you together because you're going to feel more like partners in this, but if you don't stay together, you'll know where the bodies are buried. Amen. At the very least, though, I mean, you said you handle it. I don't want to know if somebody handles it, maybe like divide and conquer, but always know, at least know the

passwords, right? What kind of things should women, I mean, let's be real. This is just the reality. Do as far as knowing where those financial bodies are buried before it's too late. Right. And again, like one of the things, like I said, it's what you have, what you owe, what you make and what you spend. You want to know how much debt there is. And you also want to know what you're spending, because if we're not paying attention, then we don't know what our marital lifestyle was. So we don't know what we would be wanting to ask for or be entitled to in terms of spousal support and child support too. Some people, it doesn't really hit them until they see that their kids aren't going to get to keep going to

that private school or can't keep going to summer camp every summer at that expensive summer camp, or don't have the same kind of genes that the other cool kids have at their school. That's when you're like, oh, I really should have been paying attention. So yeah, I mean, I feel like we have a responsibility to ourselves and our families to participate in what's going on financially. But often it doesn't really happen, that financial education until the end. And so many women, and it is women, come to me and say, I'm so embarrassed. I could get a table at any restaurant. I have a personal shopper at these five department stores. I drive this beautiful car. The people at the hairdresser know me. You can't even get

an appointment there, but I have a standing and I don't know what we earned and what we, you know, and I say, well, here's the good news. You will never be in this position again. You will, you are going to learn it now and you are now going to be the master of your own destiny. Would it have been better if you knew before? Sure. Coulda, shoulda, woulda. Here's where we are. Yes.

We've talked to so many women, Ivy League educated, even financial advisors, like this idea of a shoemaker walks barefoot or the dentist has the worst teeth. Sometimes, you know, even women who have their own acumen are so, so embarrassed when they don't have a sense of what's going on. I wanted to do a show for a long time. Maybe we should do it together of stopping weddings. This is so not romantic to have couples talk about their finances because so few do or have a financial plan. One of the four pillars you talked about was debt. So can we zoom in on that for a second?

During a divorce, what typically happens to the debt? 50-50, even if it's racked up by one person? Well, if it was accrued during the marriage in a community property state like California, yeah, it's their debt too. And so people will say, I had no idea that he was charging all this on this credit card. Too bad. Now, again, there are some loopholes for like innocent spouse. Like if you've like done some terrible tax things or whatever, there can be, if there's really like criminal and you didn't know about it and maybe he or she was forging your signature, that. But for the most part, if you're on that private chartered plane and you're wearing the bling and you know, the Gucci, that's on you too.

And so, yeah, that's going to be a big thing. We often will negotiate with debt because if the person that's in no position to pay it back wants to get less money from the community as a result of the other person taking more debt, that's something to talk about. But yeah, it's really scary. And it really is. It doesn't necessarily make sense. But when you think about it, we have to have laws that could kind of fit all sizes. And so that's the main one, which is you accrued it during the relationship, during the marriage, it's community. The other interesting thing, going back to stopping weddings, I talked to a lot of people about prenuptial agreements and how it's just not sexy or romantic to talk about money. I just don't

know. I think it's sexy. If you marry somebody and you're getting married and he's got a ton of debt already, so you're not actually going to be. So now he's using the community money that he's making, working hard, staying out late, working on weekends while you're taking care of the kids. But that money is going to pay off his debt that he accrued before you guys met each other. These are things you should know about going in. And you may not care, but you may care. And so you may want to say, you know what? Your debt is your separate. We can peel off some of what's earned

during the marriage to be that, but then I get a like amount to put in savings or something else. It's important. And I will say that the clients that I do prenuptial agreements for, having those realistic expectation discussions while not that fun

causes them to stay together longer because they actually know what they're getting into. And I think that's so important. Hold on to your wallets, boys and girls. Money rehab will be right back. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN.

When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener

by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. Now for some more money rehab. So important. I often say to take control with that conversation because I think also women feel like, oh, it's so icky and like he's making me do it.

No, fuck that. I mean, I worked hard. I'm marrying later in life. Like I have my own stuff. I'm going to bring it up first. And I often think with hard conversations, somebody has to go first. So if you want to talk about it, what do you think about just taking back the control and you starting that conversation? What advice would you give to couples thinking about it? I would say, and again, usually the person wanting the prenup is like, how do I even

broach the subject? And I'm usually like, well, are you sober? Because if you could have a bottle of wine there, that'd be helpful. But again, I think you go into it with love. You say, I want to be with you for the rest of our lives. And we're going to have babies together. And you're going to be in that delivery room. And it's not pretty, OK? That's not sexy either. If you're at that end of the baby delivery, if we're going to go through that, let's have

a little bit of a conversation about debt and a conversation about not even necessarily things that are going to affect legal or divorce. It's not even only that. It's, hey, I have elderly parents. And I don't want to put them in assisted living. I'd like them to be able to come live with us. What do you think? Or, hey, we've been renting this apartment for however many years. Now we're getting married. I want to own a home one day. What do you think about that? Or do you have a 401k? Are we putting money away for our retirement? I don't want to work forever. Why would you not speak about that with somebody who you really plan to be with for the rest of your life? Isn't that that kind of romantic?

Yes. Yes, it is. I think let's say twice for the people in the back. It is romantic. And it's a really loving conversation if you do it in the right way. I think timing, tone and turf, bottle of wine. It's, you know, talking about your future. It doesn't have to be like some scary thing with like lawyers and a boardroom. And I'm thinking of that scene in 50 Shades, where it's like a contract. It doesn't need to be all of that. And, you know, another argument is taking the power back from what the state says, right? Right. Well, that's what I always say. I mean, that's why I'm not married, which is I don't want the state of California all up in my business. Okay. So I like to be able to define how I do things. If I'm in a monogamous, loving, committed relationship, I don't want anybody telling me what I have to pay him. If we split up or that half of what I'm

earning, working really hard, it's going to go to him. I like knowing that we can define our own terms. And I think that's actually kind of okay. People are like, oh, it's a contract. I don't want to have a contract in my marriage. You have a contract in your marriage, dude. It's just the contract that the state wrote for you. So think about that and figure out if you're unique enough to make some carve outs in that that suit you guys. So if you have a prenup in a 50-50 state and you decide on something else, does the prenup supersede? Yeah, that's what you're saying, which is we both understand that in California, but for this agreement, what we earned during our marriage would be 50-50. However, I'm a big movie star and I make $20 million per film. And two days after we tie the knot,

I'm going to work on this film. I'm not comfortable with that being community property. And so we're going to opt out of the community property system. We're each going to keep whatever we earn separate. And we'll talk about what happens if and when. And I think, and if they're done the right way, like there has to be full disclosure. So now again, I show you everything that I have, everything I've made before. Sometimes people say, well, you already have, you've already done six movies. You've got, you've got $120 million. Why do you need? No, the deal is I worked really hard to become this movie star or whatever it is, director, executive, attorney, banker. I want to keep this money for myself.

And maybe we both take a certain amount of what our annual income is and we put it into a bank account. That's our house account that pays our bills. Maybe we both agree that if we're going to buy a home together, that we each contribute a certain amount. Maybe it's not equal, but we lay it all out. We talk about it beforehand. It's not just money flying here and there that we can't ever figure out. That's why people have messy, ugly divorces because they weren't clued in on what was

happening during the marriage. Right. And reality, you know, shock and costly. I think a lot of people are intimidated by the cost associated with divorce. I was having dinner with a girlfriend in New York and her and her husband got in a fight and she got a new puppy and it was a whole thing. And she texted him, are we getting divorced? And he's like, I can't afford it. That's romantic. That's a nice makeup. Too costly.

Can you ballpark how much a divorce is going to cost a couple? Can there be a percentage of a net worth to associate with it? No, it just depends on what that couple has and again, what they owe and what's coming in and all the different, it's not just the assets of the money in your bank account. If you have homes, if you have cars that you own and they're not leased, if you have expensive jewelry, art, we get into big battles over art. So many people are buying art now. So now we see what the art is, but what's it worth? Is it worth what you paid for it or what you could get for it now? And then of course, there's intellectual property. If you wrote a screenplay or a song, or you painted a painting during the marriage, absent the prenup opting out of it,

that's community property. So you can see why people would be very sensitive about that. But no, it's totally hard to say what it would cost. And again, not just the emotional cost, but the financial cost. Now you're paying lawyers hundreds of dollars an hour to get into letter writing wars or have a hearing about how much temporary support is going to be. That's why my first two steps, like I said, figure out what your financial picture is and then educate yourself to the law and your state. In a lot of instances, you may feel like, hey, this is not rocket science. I don't need Laura Wasser at a thousand dollars an hour to tell me how this is going to work out.

I see what we have. We're dividing it in half. That's what the law says. Let's go do it ourselves with a mediator or online. So is that your biggest tip for saving money during divorce? Are there any other tips to save during the process? Yeah. Treat it like a business transaction. The heartache and the insecurity of, oh my God, who am I going to spend New Year's with? Are my kids going to get put to bed by another woman a few nights a week? Am I ever going to be with anybody again? I haven't had sex since I got a C-section scar and it's going to be awkward. All of those insecurities absolutely are valid, but they're so much better handled by a mental health professional who usually is going to cost less than a divorce lawyer. And I'm here to tell you that we divorce lawyers are usually kind of hot messes. Like we don't know what to tell you about

dating or what childcare or whatever. So use your divorce lawyer to do the legal part and keep it simple and make it a business transaction. And I'm not saying dismiss all of the feelings you have, but handle those separately as part of this business transaction of getting divorced. You really need to be very reasonable and you really need to be cost conscious. No, I learned that the hard way early on fetching or to my lawyers. And your lawyer should have said to you, you know what? We're not friends. Like I really, I can appreciate you, but I don't think I should be charging you to hear this because it doesn't make sense for you. But a lot of us don't do that because the more you argue and kvetch, the more money we make. That's right. And something

that is also emotionally charged is the house, the home. How do you divorce yourself from emotions associated with that? Because the huge question is who gets the house? And if somebody listening really wants to be the one to get the house, how would you recommend they go about making their case for it? Well, first you have to figure out whether you can afford the house. Okay. So if you're, if the house is a $2 million house and forget whatever, whatever is owed on it, let's say you owe 500,000, but you got a $2 million house. So each of you, assuming it was purchased during the marriage, each of you has a $1 million interest. If you can come up with another million out of whatever the other assets are to trade, you can buy him out. Now you've got the house. Now, can you pay that monthly mortgage

and the landscaping and the water and the utilities? You need to find out really if you can afford it. If you've got so much money that you can afford it, then you need to decide, do I really want this house? I had so many clients fight for the house. And six months later, they call me and they go, you know what? I sold that house. I don't need this house. It reminds me of my kids growing up. It reminds me of happy times I had. I want to start fresh. I bought like a super modern condo on the beach. I'm living my best life with a bottle of Chardonnay and I don't need that house anymore. Sometimes I tell them that story so that they can think about that beforehand so that you're not paying the capital gains all on your own because

it was awarded to you. But again, you really need to think about it. And for better or worse, most divorces take a while. In California, we have a six-month waiting period. So you do have time to kind of adjust to the idea that this is my next chapter. What do I want it to look like? And do I really want to shoot my entire wad on getting this house that may not continue making me happy? What about someone who wants to get alimony or child support? What do they need to show for those things? And how is it determined? So it's determined differently in different states. We in California have one of the highest guideline child support amounts of any state. That's why you have people flocking to California, getting pregnant in California, living in California and being like, I want some California child support. And it's forum shopping,

but if it happens here and they're living here, whoever the person, the baby daddy is, has got to pay here. So, and again, it's guidelines. You plug in how much money each parent earns. Both parents are supposed to be contributing to their child's support. So even if it's a big difference in income, it goes in. What the timeshare is, are they sharing 50-50 or is one parent only seeing the kid on the weekends?

Obviously the parent who has more time with the kid is gonna be the parent more in need of funds. And there's some other things that kind of factor into the equation, but for the most part, that's how we figure out child support. Spousal support is, and by the way, children are supposed to be able to live a lifestyle that's commensurate with their wealthiest parents. So you don't have one parent that's living in a mansion in Bel Air and the other that's living in a one bedroom apartment, you know, off of Ventura Boulevard. You want to make sure that that kid isn't always wanting to go to mom's house because mom has the pool and, you know, the cook and everything else. So we try to have whoever's

making more money paying the other person child support so that it can be similar, not the same. You don't need to buy them an airplane to fly private all the time, but you're probably going to be putting them up in first class for vacations and stuff like that. So that's why you can see why people flock here to have babies. Spousal support's a little different. We don't have guidelines necessarily. What is supposed to happen is you're supposed to be receiving support, which enables you to continue living the lifestyle to which you became accustomed during the marriage. And a lot of times what happens is, again, these are the people that weren't paying attention. Wait, my lifestyle during the marriage was

I had lunch with the ladies. We went on nice trips. I went to the spa. I bought $3,000 handbags and $2,000 shoes. And I had all this jewelry and my makeup done all the time. And then you realize there's no money for that. You guys were totally living on credit or beyond your means.

No court's gonna order the pay or a spouse to continue funding that lifestyle if there's no money available to do that. You guys were totally living on credit or beyond your means. No court's going to order the pay or spouse to continue funding that lifestyle if there's no money available to do that. And particularly here in Southern California, we saw a big hit during COVID because so many people in the entertainment industry weren't working and were really looking at the past three years. So everybody really took a hit. And so some lifestyles did as well. For today's tip, you can take straight to the bank. I cannot stress this enough. Have a conversation with your partner about a prenup. After this episode, it's not just me who's beating the prenup drum. Laura's right alongside me. And if that doesn't convince you, I don't know who or what will. This one conversation will determine who gets decision

making power over your life, you or the state you live. So get out that bottle of wine and have the conversation. You got this. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic,

and Brandon Dickert for his editing, engineering and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.