At The Money Fan Favorite: The Finances of Divorce

**Barry Ritholtz** (0:16)
Is there any life event that's more expensive, confusing and stressful than a divorce? You're not only dividing your family, you're also figuring out the disposition of a lot of assets, portfolios, real estate, trusts, businesses, more. I'm Barry Ritholtz, and on today's edition of At the Money, we're going to discuss the finances of divorce. And full disclosure, I am and remain happily married for 32 years. To help us unpack all of this and what it means for your portfolio, let's bring in Patrick Kilbane of the RIA Ullman Wealth Partners and also leads the Divorce Advisory Group.
So, Patrick, let's start with the basics. You focus on people going through divorce. What's the first financial triage you do when a new client calls?

**Patrick Kilbane** (1:12)
Barry, great to be with you. Thank you for having me. When somebody gets hit with this bomb, when this bomb is dropped on them, I'm a big fan of Coach Lew Holtz, and he has an acronym WIN. It stands for What's Important Now.
So I generally talk to the person who this might be their first exposure with the legal system, and I figure out what their goal is. Has their estranged spouse cut them off from the cash flow, from the assets? Is this a child custody situation? What is the first thing that we need to handle? And then it's sort of giving them the confidence and the reassurance that, hey, you're not the first nor the last who's gonna go through this, and I'm gonna be your Sherpa through this process.

**Barry Ritholtz** (1:55)
So I imagine there are some consistent large money mistakes people make in the first 30 to 60 days of a separation. Obviously it's very emotional, and most people don't go through these sort of things repeatedly. What sort of mistakes do you see before the lawyers and the written agreements start showing up?

**Patrick Kilbane** (2:17)
Like most people who have a long history together, they have solved a lot of problems together. And I see people trying to work the divorce settlement out among themselves. And the spouse that may not have all of the data, all of the information, may not know the extent of their holdings, may make some agreements before they have any idea what their rights are. So like you Barry, I'm a lawyer, although I'm not practicing anymore.
I litigated high-net-worth divorce cases for 10 years. And what I try to do is not give legal advice, but say, hey, let's slow down a little bit and let's make sure that you have a full understanding of what you're agreeing to or waiving before you do it.

**Barry Ritholtz** (3:02)
So I think about all the assets that are involved in a family dissolution. There's cash, there's retirement accounts, there's property, there's business interests. How do you help clients understand the value of what they're negotiating, either cash up front versus a longer term set of assets?

**Patrick Kilbane** (3:24)
Great question. So I try to divide everything into different buckets, so I make sure that my clients aren't comparing apples to giraffes. They've got to be comparing apples to apples.
And depending on where the spouses are situated and where each one of them wants to go, we know that all assets aren't created equal. So there may be an opportunity working together to reach a divorce settlement that will be more advantageous for both spouses than what they would end up in a court if the court just took a meat cleaver and busted everything in half.

**Barry Ritholtz** (3:58)
So you have a background as a matrimonial lawyer. How does that change the way you sit down as a financial advisor when you're having conversations with clients who are just starting the divorce process?

**Patrick Kilbane** (4:14)
Excellent question.
I have a perspective from litigating these cases for 10 years and seeing people at the very beginning of the process.
I think a financial planner, a wealth manager, an asset manager who may not have that same experience may want to get right into the details. You mentioned the word triage earlier in this conversation. I mean, this client, this family is coming to you. I mean, they are experiencing trauma. The wound may be fresh. So I think we really have to slow down. And it's sort of like, you know it when you see it. You're ready to delve into the financial planning and start talking about Barry 2 when Barry is ready to start thinking about Barry 2.0, but a lot of these people come in and they're in a total fog. They're trying to figure out where their next dollar is going to come from. How is cash flow going to even let's back up. Where am I going to live? So we have to sort of satisfy that bottom level of Maslow's hierarchy of needs before we can even get into that financial planning conversation.