EP 93: Busting Dangerous Divorce Myths with Larry Sarezky - Matrimonial Lawyer, Mediator and Writer

LS-sm.jpg

"You hear parents say, 'I have my rights as a parent.' A lot of judges will look at that parent and say, 'Sir/Madam, what I’m interested in is the children’s rights.' That’s paramount…To parents – if you can possibly work these details out, do it. You don’t want to have to submit these kinds of issues to a court. The kids get caught up in a process that you don’t want to see them go through. You’re basically turning over to somebody who barley knows you, the decisions that you should be making as parents.” - Larry Sarezky

In this episode we have repeat guest Larry Sarezky on the show. He’s going to tell us about some common misconceptions about divorce you may not have known. What you hear, what your friends say, what you see on TV - a lot of it isn’t true! Learn straight from one of the most experienced family law attorneys in the United States.

For more about Larry Sarezky:

Buy his book Divorce, Simply Stated on Amazon. A must-read for everyone!

Visit his sites at http://divorcesimplystated.com and http://www.huffingtonpost.com/author/larry-sarezky

This transcript has been edited for clarity.

Shawn: Today on the show I have with me Larry Sarezky. Larry is a matrimonial lawyer, mediator, writer, and also the author of Divorce, Simply Stated: How to Achieve More, Worry Less, and Save Money in Your Divorce. Larry, welcome to the show.

Larry: Thanks Shawn, glad to be here.

Shawn: As the listeners might know, this is actually the second time we’ve had Larry on the show. You are the first repeat guest we’ve ever had. If people have heard the first episode, it’s episode 54 where we discuss how to choose a divorce attorney, where we go through that chapter in that section in your book Divorce, Simply Stated.

Today I want to get into some myths that people have about the divorce process. You have a great chapter; it’s chapter two for the book, called Divorce Fact Checking. You know what section I’m talking about?

Larry: I do.

Shawn: Excellent.

 Larry: I wrote it.

Shawn: Well, we’re going to go through some of them because a lot of the listeners have some misconceptions about divorce, and there’s also a lot of bad information floating around there. Let’s jump right in. The first myth is that legal separation is just when you live apart from your spouse, pursue it to a written agreement. What do you make of that? 

Larry: Well, it’s not true. I can say it pretty simply. What legal separation is, is a judgment or decree that you get at the end of a lawsuit, that is very similar to a divorce. It’s called a legal separation action or case. The only difference between going through that process, is that once you get you judgment of legal separation you can’t remarry because you’re not divorced. In every other respect, it’s the same. You can resolve all the issues having to do with property settlement, writing up your property, support; that’s child support or alimony and all the children’s issues, a parenting plan and how you’re going to spend your time with your kids and split that up. All of those issues can be resolved in a legal separation action.

As I say, at the end of it, you can’t remarry. You might wonder well, why do it at all then? The answer is that some folks for various reasons, sometimes religious reasons, sometimes you just can’t quite pull the trigger on the divorce and feel more comfortable starting a legal action. The good news is that it can be changed very easily in mid-stream to a divorce action if either one of the spouses wants to do that. It’s not as though you have to start all over again. The other thing I’d say about it is that you might say, “Well alright, maybe I’m wrong about that. What’s the harm?” Well, there is some harm in believing in these myths, all of them including this one. For example, the written agreement that you have may or may not be enforceable. If there’s no case and divorce case pending when you make an agreement that you think is a legal separation, but isn’t, what you don’t have is the contempt power of a court to enforce that agreement. That’s something that you get in a divorce action or if you’ve actually started a legal separation case. You have a judge who you can get to quickly and say, “Listen, we have this agreement and my spouse is in violation of it.” But if you’ve just signed an agreement and you haven’t started the case in court, you don’t have that. That’s the big drawback.

Shawn: I think you brought up a lot of interesting points on that one. I want to ask some follow ups, specifically on this one.

Larry: Sure.

Shawn: The first is that it sounds like, if I understand you correctly that when many people speak colloquially or just in casual conversation that I’m separated and I live in a different place form my spouse, that doesn’t have any legal ramifications the same way that legal separation does. How do you think about that? 

Larry: There’s nothing wrong in saying that you’re separated. It has practical significance because you’re living apart. It doesn’t have the legal significance that people think it has. That’s the problem, and they call it a legal separation. Well, we’ve separated and we’ve agreed on a few things. It’s more a description of the fact that you’re simply living apart.

Shawn: That’s interesting. The other you also said is that legal separation is almost identical or is virtually identical to the divorce process with the exception of at the end of it you’re legally separated and not divorced. So it sounds like if you’re thinking about separation, you should basically think about it, that you’re going to have to deal with all of the exact same concerns that you deal with. If you were going to get through the divorce the ends result is a little bit different from a legal perspective. 

Larry: That’s right. And there’s one other thing I should point out. I said that you can change a legal separation case into a divorce case while it’s pending. You can also do it afterwards, two, three years later you can turn that legal separation –in every state that I know of –into a divorce decree. However, the judge is going to have to make a determination that the agreement that you reached was not only fair at the time that you reached it but is also fair at the time that you come before the judge two or three years later and say, “Okay, we have this legal separation decree, we want to make it a divorce.” Things may have changed during those two or three years. An undesirable consequence is that agreement that you worked hard on, might be found by a judge in light of new circumstances like one of the spouses hit the lottery, no longer to be fair.

Shawn: I think that’s great information. That’s one of the questions that people ask me all the time about the separation versus divorce process. I think you just illustrated a lot of really important points that people don’t necessarily consider. So let’s move on to the next myth. That is, no fault divorce means that family law judges cannot take into consideration the reason a marriage broke down. Why don’t you tell us more about that one?

Larry: That’s a good one. That is also not true. Some of these myths have some kernels of truth and this one doesn’t. What no fault divorce is –and it started in California a while back, that was the first date to adopt no fault divorce –the fact that neither spouse has to be at fault for the breakdown of the marriage. It doesn’t have to be, it’s what we call marital misconduct. If two people who are married want to get a divorce, they can get a divorce. With New York, being the last hold out, they finally adopted a no fault divorce statute two three years ago. All of the states now permit no fault divorce. Now, in some states, regardless of the fact that they are no fault states, evidence of marital misconduct or evidence of the reason that the marriage broke down is admissible. Those are probably a minority in the states but it’s a completely separate rule. The state either allows or doesn’t allow evidence of that kind of marital misconduct. Even though you’re in a no fault state –and everybody is at this point –some of them that evidence is still admissible.

Shawn: Got it. Let’s move on to the next one which is, property gets split 50/50. You should probably define both of these as well. Property gets split 50/50 and community property states and inequitable distribution states. 

Larry: That’s a common misconception as well. I’ve had many clients come in and say, “This will be easy. I’ll tell you what we own and we’re just going to split everything 50/50. Here’s five hundred dollars, that ought to cover it.” Unfortunately, that’s not true, that’s why I started doing mediation because divorces are so expensive. Let’s start with community property states. There are eleven and a half of them actually, and I’ll explain what I mean by that. In a community property state, there is a concept of –strangely enough –community property. That is defined usually as any earnings produced by the labor of the spouses, and property purchased with those earnings, between the date of the marriage and the end date of the marriage. Inheritances, most gifts, and certain trust assets as well as property acquired before the marriage, all of that is excluded. Whoever owns that, whoever inherited the money, whoever owned the property, that’s theirs. It’s not there to be split up. Once you define what the community property is, then it usually is divided 50/50, but there are exceptions to that as well and it depends on the States. I can get into more detail if you like.

Let me talk for a second about equitable distribution states. We have eleven and a half community property states. The half state is Alaska, which is inequitable distribution states that allows couples to elect community property treatment if they want to, which is kind of a strange rule. I think it may come from looking too long in the sun trying to see Russia from the front porch. It’s not a bad rule actually. It gives people alternatives. So what’s equitable distribution? What are these other 39 states? Equitable distribution simply means that the judge has the authority to divide property in a fair way; not necessarily equal. Many judges start out with a marriage that’s at least five years. It’s a very short term marriage, often the property goes with the person who either came into the marriage with it generated it in an equitable distribution state. In marriage to some lengths judges often start out at 50% and the spouses or the lawyers can try to convince them why a 50/50 split is not fair. Again, there are things that are off the table that are not included. In most equitable distribution states like community property states, inheritances and property acquired before the marriage is often not included in the court has the authority to divide up. Does that answer it?

Shawn: That does, that’s very helpful and if you ever watch movies or television or just talk to people I think the perception is just that you can walk in and chop things in half. Even there is some funny advertisements to that effect. That is obviously not the case. I want to shift gears a little bit and talk about children. One thing that many people might not know is you are one of the foremost experts in custody and parenting and children issues in the divorce process. I want to talk about a few custody and child related matters and myths that people have. The first being, that joint custody means that parents divide their time evenly with the children.

Larry: That’s a no also. [laughter] That’s not true. The first thing to do is to draw the distinction between what’s called legal custody and physical custody. Legal custody is decision making essentially; how the parents are going to divide up, the decision making, or how they’re going to make those decisions together, which is better so they can do it.

Physical custody as the name suggests means where the kids are going to be and how the parents are going to divide up the time with the children, where they’re going to live and all of those kinds of details. We used to talk in terms of visitation and custody, now more often we use the term parenting plan, which doesn’t trigger the kind of emotions that visitations –that’s just a bad word – let’s say it’s dad that moves out of the house and the kids are living with mom. Visitation is not something that dads want to hear. They want to hear about sharing time with their kids and participating in all the things that make child rearing a good thing. So that’s an important distinction.

We’re talking here about physical custody; dividing evenly your time with the children. That’s just not what joint custody is, it means that you have a parenting plan by which you’re splitting up your time with the kids in a matter that is fair. Most importantly, and this is the standard that every court applies, in a manner that’s in the best interest of the children. You hear sometimes parents say, “I have my rights as a parent.” A lot of judges will look at that parent and say to sir/madam, “What I’m interested in is the children’s rights.” That’s paramount. That is and what should be what drives these decisions. The last thing I’ll say is, please –to parents –if you can possibly work these details out, do it. You don’t want to have to submit these kinds of issues to a court. The kids get caught up in a process that you don’t want to see them go through. You’re basically turning over to somebody who barley knows you, the decisions that you should be making as parents.

Shawn: I want to jump on that last point for just a second. It more than sounds like you strongly recommend that if you’re getting divorced you can come up with a workable parenting plan on your own without the attorneys and have your attorneys maybe figure out the final details to make sure it’s legal. You can decide that on your own if you’re willing to do it.

Larry: Yes, you can certainly come up with the broad strokes, the general concepts. Like any agreement in my view, it’s always good to have a divorce professional and that includes lawyers and divorce coaches and financial analysts who can tighten up the language, who can point out to you the things that you might not have thought about. Listen, if you married your spouse you must have some things in common. Some of the things you had in common probably had to do with child rearing; you had some shared values. I often tell people the first step to get to a parenting plan is to sit down together hopefully, and make a list of all the things you agree upon with respect to the kids. That could involve religious training, that could involve education, sports, and also some things that are specific to divorce. We’re not going to convey messages through each other through the kids, we’re going to shield the kids from any conflict that we have, and that’s agreement is how you’re going to talk to the kids about the divorce, what you’re going to tell them, and all the rest. So you can build on that list of shared goals. That’s a great place to start, and then get to the parenting plan based on those shared principles.

Shawn: I think that’s great. You mentioned a subtle tip in there. You said start with everything that you agree upon. That’s a good way to start making progress at least working out issues that you do agree upon and then later you can deal with the things that you might disagree upon. Starting on a positive food is certainly a much better way to get close to some sort of agreement in that respect. 

Larry: One reason is that it creates momentum. You say, “Oh we agreed on this and let’s try this issue.” There really is momentum and I see that particularly in mediation where I always start with children’s issues. Parents who come into mediation are usually on the same page generally about children’s issues. Once we start resolving them you see that momentum building. Parents without lawyers will experience the same thing I think.

Shawn: So let’s move on to another myth also in the children’s related area. This on that, I don’t need a lawyer to figure out my child support, because anyone can look up the child support guidelines chart.

Larry: Every state has what are called child support guidelines. They are based on the income of the parents and the number of children. That’s kind of the two basic ingredients. I say in the book –I say it a little bit more crudely then you did –I say we don’t need a lawyer any dope can look up the amount that the child guidelines called for. What I say in the book is, you better hope that dope is a lawyer. Here’s why, as I said, the two ingredients are the number of children and income. The trick here is to make sure you’re using the right income. Different states have different rules about how income is defined. It’s not necessarily the income on the pay stub because pay stubs can be very misleading as to what your net –after tax income –really is, for a variety of reasons. Some people have seasonal employment so their pay stubs at any point in the year show that they are making more, and wind up making on average, or less. The number of exemptions, you know you fill out the W-4 form if you’re employed and you specify a number of exemption, that can affect how much money you have. Of course if you’re a home owner, at the end of the year you do your taxes and you have a sizable deduction for mortgage interest and property taxes, and you might get a tax refund. Again, that’s not reflected in the pay stub. Then you have people how are self employed. That takes some looking into. Lawyers and divorce financial analysts and divorce planner, are really good at ferreting out who has her own business. What is she really earning? What’s she really getting out of this business? That takes a little bit of looking into.

Shawn: I think that makes a lot of sense. One last one for the audience. This one is that child support and spousal support obligations can be avoided by filing for bankruptcy. 

Larry: That’s a no. It just isn’t true.

Shawn: I think you’re going to upset a few people with that one.

Larry: Maybe so but hopefully it will reassure some people who are on the other side of the equation. Child support and alimony are not dischargeable in bankruptcy. That means they don’t disappear even if the person who is paying –that is what we call the obligor because we’re lawyers and we have to use words like that –goes into bankruptcy. In fact, then again this is where having a divorce professional can help, you can structure your agreement so that things that you might not think of as child support, will still be considered child support. These are things like attorney’s fees –that’s money you’ve paid your lawyer to get child support –you’re getting reimbursed from your spouse, that can be considered child support. If your spouse goes into bankruptcy you will still get. Money that you put aside, whether it’s for orthodontics or that kind of thing. If you think your spouse may be going into bankruptcy, make sure that’s not considered property settlement, that money that you set aside. Make sure because property settlement awards are different. If you want to protect it as child support, say in the agreement this is in the nature of child support.

Shawn: On that vein, what happens if someone were to lose their job and then cause another host of financial obligations, or complications, and they are responsible for paying support. How does someone protect themselves in that situation? 

Larry: That’s a really good question. It doesn’t happen automatically. I’ve see people learn that tough lesson too late. If you lose your job and you are under an order, whether it’s a temporary order while your divorce is pending or permanent order at the end of your divorce, you want to file a motion with the court right away, that it’s a motion for modification –that’s what it’s called in most states –and you simply say in the motion that you’ve lost your job and you’re asking for relief from the child support order. In most states you don’t have to put a lot of detail in there. You will have a hearing and you can just lay out the facts. The judges have pretty broad discretion to suspend the order, to modify it –that is to reduce it –and they’re not going to terminate child support but they will give you some relief especially if it’s been going on for a while. If you’re out of work for two or three weeks you’re not likely to get much help. If this drags on and on it’s only fair, and judges understand that you some help there.

Shawn: Also, if you’re on the other side of that same equation and your ex spouse loses their job, and they’re paying you support, is there any other way to protect yourself? Or do you just expect that things might change 

Larry: There are some arguments to be made if you’re on the other side, which is that, “Listen my spouse has a fair amount in savings.”, and depending on the law of the state that certainly might be reason for the judge to say, “Listen, let’s see how this goes. For the next couple of months, you certainly have substantive saving, enough to be able to support yourself and your children, and so I’m going to keep this order in effect and come back in two months.” You might get an order or something like that. That’s certainly a persuasive argument to be made by the recipient of child support. Let’s say its mom, because her finances may be every bit of tight as dads.

Shawn: I think that is very helpful for people to think about. So for people who want to learn more about you and your work, what’s the best way for them to contact you?

Larry: They can go to the website which is www.divorcesimplystated.com and there is a contact page there where they can reach me, or they can email me at info@divorcesimplystated.com

Shawn: Excellent. Larry, as always, it’s a great pleasure having you on the show. You always have helpful information for the listeners.

Larry: Thank you Shawn, certainly my pleasure. 

Thank you for listening to the Divorce and Your Money Show. Visit us at www.divorceandyourmoney.com for a full transcript of this episode. You will also find 1-on-1 coaching and be sure to check out the NEW courses Steps to Take Before Divorce and How to Get a Divorce without Losing Everything.

If you enjoyed the show, please take a moment to leave a review on iTunes, as it will help other people discover this free advice.

Shawn Leamon, MBA, CDFA

Dallas, Texas

Shawn C. H. Leamon is Managing Partner of LaGrande Global, a firm that helps successful families manage large financial transitions like divorce, inheritance and selling a business.

He earned his Bachelor of Arts from Dartmouth College, double majoring in Economics and Philosophy, and his Masters in Business Administration at Spain’s IE Business School.

Before founding LaGrande Global, Shawn helped manage $1.1 billion in client assets at Bernstein Global Wealth Management. He also worked as a credit research analyst at J.P. Morgan. He is a Certified Divorce Financial Analyst, and he has been an advisor to numerous high-stakes divorce cases.

Shawn is the author of two well-received finance books: Managing Private Wealth: Principles, and Divorce and Your Money: The No-Nonsense Guide, both published in 2016.

In his spare time, Shawn is an ultra-endurance athlete and has competed in events as long as 24 hours. He is an Eagle Scout and a member of the Alumni Board of Greenhill School.