Kilbane Frederick: Episode 680

Transcript

[0:00:26] JB: A divorce proceeding is something you never want to think about until you're one of the people for whom it suddenly becomes the most important thing in your life. Filling in that information vacuum are Patrick J. Kilbane and Caitlin Frederick. In their new book, Move Forward Confidently: A woman’s guide to navigating the high-net-worth divorce, they explain exactly what happens in divorce proceedings and everything readers will need to navigate it successfully. On Author Hour today, they discuss why a divorce lawyer is not actually enough. Red flags to look out for and the importance of focusing on mental health throughout. Hi Author Hour listeners, I’m here today with Patrick J. Kilbane and Caitlin Frederick, authors of Move Forward Confidently: A woman’s guide to navigating the high-net-worth divorce. Patrick and Caitlin, thank you so much for being with us today.

[0:01:27] Kilbane Frederick: It’s great to be here, thank you.

[0:01:28] CF: Yes, thank you.

[0:01:30] JB: Okay, you all do the kind of work that I imagine people hope they will never need and then sometimes find themselves suddenly being very happy to have. Tell me about the desire to write this book and how it came to be?

[0:01:44] PK: Sure, Jane. I’ll start off. I spent nearly a decade working at large law firms throughout the State of Florida and guiding high-net-worth women through the divorce process and I always had much more fun with my clients and who a lot of these people who became friends after the fact once they were done and I got to see the change. Almost a decade ago, I joined the current job that I have Ullman Wealth Partners and I’ve taken this expertise that I have in wealth management and with my legal background to start helping the women who were going through the divorce process, start to think about that change and the end in mind and what their life is going to look like after the divorce case is over with and help them and their lawyers start to make these decisions while the case is going on.

[0:02:41] CF: My background, I started out in more of a typical CPA and valuation role and I had actually kind of gotten to this specific sector of the industry, sort of by accident but through that, by growing up on more traditional way, I’m able to work with Pat and say, “You know what Pat? Someone who didn’t grow up with such a strong legal background like you, doesn’t know XYZ.” Even simple things like how a mediation works. When I talk with people and they’re asking, “Well, how does it work?” The first thing I always say is, it’s not like in the movie Wedding Crashers because that’s the first scene that everyone always thinks of for a divorce, where you’re all sitting in a room together and you’re hashing it out at a table. It’s little things like that, that are nice to be able to explain to clients and do it in a more of a relaxed way I think when people go to see an attorney, they’re kind of automatically a little bit more stressed and this is just a nice way to help people explain the process in more of a lighter manner.

[0:03:54] JB: It is a complicated process. This book goes a long way toward clarifying it. Let me back up before we get into all of that, tell me more about the client and the reader. High-net-worth women. Is that women who are bringing in a lot of money or women who are leaving a partner who has a lot of money or both?

[0:04:13] PK: It’s a great question. Our typical client is a woman who is married to someone who maybe their spouse was the breadwinner, they have all the relationships with the CPA, the estate planning attorney, the wealth manager, maybe somebody who helps them with property and casualty insurance and now all of a sudden, they’re left without that team, without that support system that they had around and candidly, they wouldn’t necessarily trust those people from their soon to be former life because those people may be loyal to their spouse. We’re in a unique position to really help garner that trust and help set them up with a brand-new team who they’re going to feel comfortable and trust.

[0:05:06] JB: I imagine people come to you, these first meetings, they’re in a lot of distress, what’s the first thing you say to a new client?

[0:05:15] PK: I tell them that because I’ve shepherded so many people through this process over the years that they’re going to be okay. I’ve seen thousands of these cases. Start, finish, I’ve helped some people through the process two and three times, I’ve helped their children through the process and I helped them understand that if they follow their advice, they’re going to be okay, it’s going to work out and the great power from the wealth management perspective is we can help translate whatever that settlement agreement is for them and show them in black and white that it’s actually going to work.

[0:05:53] JB: Okay, you help them see the full picture.

[0:05:57] PK: Absolutely.

[0:05:57] CF: Another thing that we try to help them with is, I think a lot of people initially get kind of their list of to-do’s that they have for the divorce and they just get instantly overwhelmed because there are a lot of steps to the process, so what Pat and I try to do and what we try to explain in the book is break it up into more manageable pieces so that we can take it – Pat always says, how do you eat an elephant, one bite at a time and that really helps people realize, “Okay, it’s not so overwhelming, I can do it, I’ll go through it piece by piece and get to the light at the end of the tunnel.”

[0:06:34] JB: I mean, part of the overwhelm I imagine is just financial concepts in general. It’s very rare that that stuff is taught in schools in America, is that common for your clients to have a degree of illiteracy in that area?

[0:06:50] PK: You know Jane, you really hit the nail on the head and I think one of the tough parts for somebody going through the divorce process is, the lawyer is so busy, they bill by the hour and they have a number of cases and I think the service that we provide is kind of more of a concierge service where you’re right, we perform kind of a dual education function for the client and break those terms down and you can kind of see when they’re starting to get puzzled or they have a perplexed look on their face and I can say, “Hey, did you understand what your lawyer was saying?” Or “Do you understand what she meant?” and they may say no. I think the lawyers are used to taking the bull by the horns and doing their job and I think, one of the things that Caitlin and I help our clients is, imagine standing at the kiosk in a shopping mall and you see the map of the mall and you see that sign that says, you are here. Okay, well the map helps you understand where you need to go, what shops you need to pass to get to wherever your ultimate destination is. Now, I think some lawyers don’t educate their clients about the process and don’t necessarily show the work and how they’re going to get through step’s A, B, C and D and help them understand, “Okay, this is where we are, this is what comes next, this is why this next step is here and it may not be something pleasant for you but this is why this has to be done.” At the end of the day, I think one of our main functions is giving them that confidence, pulling back the curtain for them and helping them understand where they are in the process.

[0:08:25] JB: Speaking of pulling back the curtain, the book goes into great detail about what happens during divorce proceedings. Tell me why it was important to you to include all of that information in a book. I mean presumably, these are things you discuss with clients once they’re already in your office.

[0:08:48] PK: Sure, I felt it was important because in all of my time in the litigation world and being around law firms and the materials that are available to people going through the process, I’ve never seen a book or a [inaudiblet 0:09:01.9] or something that really kind of pulls back the curtain and says, “Hey, this is what really happens, this is what really goes on, this is how this works.” I feel like the person reading the book, hopefully they can get through it and they say, “Okay, I feel like I have a better idea of what I’m about to get myself into. It sounds very unpleasant but I feel much better about the process and I feel like I’m going to be able to get to the other end unscathed if I follow the steps that are laid out in the book.”

[0:09:37] JB: Some people feel overwhelmed by additional knowledge but some people can feel more calm. I know that was my initial response when COVID, when the pandemic started. Let me back up. One of the first chapters is offering readers advice on how to pick a lawyer. What are the main takeaways of that advice?

[0:10:03] PK: Sure, I mean, a lot of people, this may be their very first experience with the legal system and you know, marketing firms and search engine optimization companies are very savvy at promoting people or a service provider that may not necessarily be the best fit. That chapter is really again, an insider’s guide for somebody who is maybe this is their first brush with the legal system to pick the book up and say, “Okay, if I follow these steps, if I get recommendations from people who have some sort of nexus with the system and somebody who is really experienced.” I go into the book and I don’t think – I mean, there’s a lot of great lawyers but I don’t think there’s a lawyer who is necessarily a one-size-fits-all. For example, Jane, if you were going through the process and child custody was an important issue, you want to find a lawyer that really has a passion and a desire to do that because some do and some don’t. There are some lawyers that really want to focus on the economic issues of a divorce case and maybe we’ll get to it in later in the book, there is a chapter on business evaluations and what happens if there’s a business that’s involved in a divorce. The business has to be divided up. Caitlin has experience on the business valuation aspect and that’s another strength that she brings to the table and why she’s included as a co-author in the book because she really helps the person going through that process, understand how that works within the context of a divorce.

[0:11:44] JB: Okay, on that topic, you dedicate a lot of ink in the book toward the importance of having a team with varied expertise, just a divorce lawyer is not enough in your opinion. Can you tell us a little bit more about that?

[0:12:01] PK: Sure, well the divorce lawyer is sort of going to be like the general practitioner physician, right? In these high-net-worth cases, when there is a business involved, when there is complicated tax issues, maybe there are complex trust and there is estate planning scheme that’s very complicated for a myriad reasons, maybe there’s insurance that was involved in the estate plan, the lawyer is going to know enough to bring in the right expert to help them really understand and sink their teeth in to those issues that they may not necessarily have the requisite expertise in. Social security could be another example. Maybe the client is just really, really struggling with the emotional issues of the divorce and certainly the lawyer doesn’t have the requisite psychological training to help somebody but they probably have somebody on their team who can assist with those sort of softer and intangible issues that the client maybe wrestling with while the case is going on.

[0:13:02] JB: You also dedicate part of your discussion to red flags or caution flags I believe you call them. What are some of the things that people should be weary off or looking out for when they’re going through this process?

[0:13:20] PK: Sure, I think especially in the more sophisticated cases, there are more issues that you wouldn’t get in a less complex divorce. For example, when assets are divided it is very helpful that you’re involving a CPA and you are paying attention to the cost basis, you know, the tax consequences. Under Florida law, when assets are distributed when they go from one spouse to the other spouse, there is no tax consequence but when those assets are sold, that’s when the tax consequence comes into play. For example, a marital residence, a married couple can exclude $500,000 worth of capital gains from their tax liability but one person gets the house and then they sell it after their divorce, well then they can only exclude $250,000 of the capital gain. Another prominent red flag that we see all the time and this is sort of gets filed under the area of things that slip through the cracks, so when a qualified retirement account has to be divided, there is another court order at the conclusion of the case called the qualified domestic relations order that has to go to the plan administrator of the retirement account to divide up that retirement account. The ERISA federal law dividing that retirement account requires that, so sometimes if that stlips through the crack, the client may assume that, “Well hey, the court order says I get half of my spouse’s retirement.” Well, you do but not really until there is that subsequent order that actually is the catalyst for the division of the account and the creation of the separate account for the person receiving the money.

[0:15:06] CF: Another kind of cautionary I would just getting into the next section where there is a business involved that’s important and you want to make sure that people understand is how the business will get divided between martial and non-marital property. If you think for example say that a married couple has a business that’s worth $100 million just use an easy number but say that a significant portion of the business is directly attributable to we’ll say the husband in this example, the husband specifically. If Pat has a business and it’s called Pat’s Mechanic Shop and all of the customers come there because of Pat’s specific relationships with them, Pat can make the argument that he is really the specific driver of that business and if it gets determined that say 90% of it is solely attributable to Pat’s relationships, that’s called personal goodwill, so then when you go to divide the assets of the business up, someone who is not educated on this might think, “Okay, well I know he got an offer say last year for a 100 million.” He might think, “Okay, the business is worth a 100 million so we’ll split it 50/50 and I’ll get 50 million” but if it’s determined that 90% of the business is directly attributable to Pat’s relationships and it’s part of the personal goodwill of that business, which is a specific legal term that’s only used in these legal scenarios, then only the remaining 10 million gets divided in two and split between the two married parties. In this scenario, instead of the wife getting $50 million, she’d only be getting $5 million, which is half of the ten. That tends to be a huge shock for a lot of our clients when they initially come in, especially the clients who tend to think, “Okay, my husband and I are still getting along relatively well. So we think we can do, maybe do this divorce without an attorney and we’ll just reach out to people like you for kind of this additional advice” and then when they come to find out how the process actually works and the specific facts related to complex issues like when there’s a business involved, that’s really a huge stopping point for a lot of people. Whenever there’s anything complicated, that tends to be the times when it’s just especially important to have the right experts on your team.

[0:17:44] JB: Yeah, it’s hard to trust people when there’s money involved and I guess it would behoove us all to know who we can trust and make sure that person understands complexity.

[0:17:56] CF: Right and that’s part of too what we’re trying to explain with this book is, okay, here is kind of the baseline of the issues that you need to be aware of and that you need to ask your team of experts as you start to interview them and see if they are educated on these topics and just to kind of get people pointed in the right direction on what it is specifically that they need to pay attention to.

[0:18:23] JB: Yeah and since it is so complicated and can be overwhelming, I find it interesting that you have four points to remember that you mentioned a couple of times in the book and one of them is to remain optimistic, which is not something I would think of as one of the four most important things to consider when facing a divorce proceeding. Why is that so important? How big of a role does mental health play in these procedures?

[0:18:51] PK: It plays a huge role Jane. I mean first of all, I’m going to ask you a rhetorical question but have you ever met a successful pessimist? They don’t exist, right? I mean look, the average contested divorce case lasts between nine and 12 months.

[0:19:08] CF: Which can be exhausting.

[0:19:09] PK: It’s totally exhausting and every single person who’s involved in the process wants to be done yesterday, okay? If they don’t develop the appropriate coping mechanisms to get in the right frame of mind and know that this is not going to be over as quickly as they want it to be, if they do then they’re going to start – they are going to let their guard down. They are going to make – start making sloppy decisions just because their emotions are getting the better of them. A team of experts can quantify those bad decisions for them and say, “Okay, fine. If you want to get out now, you’re probably leaving maybe three quarters of a million dollars on the table and then as wealth managers, we can show them what their portfolio is going to look like when you take three quarters of a million dollars out now and what that’s going to mean for the remainder of their 25, 30 years of their life expectancy and then when they conceive those data points in black and white, then we can help them say, “Okay. All right, my emotions are getting the better of me and I need to just take a deep breath.”

[0:20:18] CF: A lot of it is people just saying, “I’m so sick of this, I want to be done. I just want closure and to move forward” and making those knee-jerk reactions where if you know ahead of time, “Okay, this is going to be X amount of stops and this is what I need to mentally prepare for” I think it makes it that much easier.

[0:20:40] PK: There’s a recent anecdote Caitlin and I just helped one of our clients through the process. And a client married to a lawyer, and the lawyer at the beginning of the case kept telling her, “Here’s my settlement offer. If you don’t take it, you are getting bad advice. There’s no way you’re going to end up with any alimony so you should take it” well –

[0:21:01] CF: Don’t hire an attorney, it will just be a waste of money and time.

[0:21:05] PK: Anyway, 14 months later, the case is concluded. Of course the wife does receive a substantial monthly permanent alimony award and way more of an equitable distribution, you know her share of the marital estate than what was initially offered to her. You know, there are – you know, patience is a virtue and being optimistic and trusting your team is only going to help the person going through the process to have a better chance at a more successful outcome.

[0:21:37] CF: Really empowering these women to be confident in themselves too because as Pat said in this specific scenario, the now ex-husband was an attorney, so I think the wife probably wrestled with, “Well, he’s an attorney, he probably knows better than I do as a non-attorney” so that’s another thing is just hoping to educate people so that they do have the confidence to say, “No, I am going to stand up for myself and I am going to go through the process the right way so that I get what I deserve.”

[0:22:08] JB: That’s a lot to chew on. Patrick and Caitlin, it’s been a pleasure speaking with you, and congratulations on the book. Again, listeners, it’s called Move Forward Confidently: A woman’s guide to navigating the high-net-worth divorce. Patrick and Caitlyn, in addition to reading the book, where can people go to learn more about you and your work?

[0:22:28] PK: They can go to our firm’s website. It’s www.ullmannwealthpartners.com and when you’re on our company website, we have a division at our firm called The Divorce Advisory Group and The Divorce Advisory Group has its own tab, its own resources and we also have a series of videos that can be used somewhat in tandem with the book talking about a lot of the topics that are in the book to help serve as refreshers. You know certainly, our contact information is on there and anyone going through the process we can help point in the right direction. Please reach out and we’re glad to help you get in the right direction and help you get more of a chance at a successful outcome.

[0:23:20] JB: Great, thank you.

[0:23:22] PK: Thank you.

[0:23:23] CF: Thank you.

[0:23:25] JB: Thanks for joining us for this episode of The Author Hour Podcast. You can get Patrick J. Kilbane and Caitlin Frederick’s book, Move Forward Confidently: A woman’s guide to navigating the high-net-worth divorce, on Amazon. You can also find a transcript of this episode as well as previous episodes on our website, authorhour.co. Make sure to subscribe to The Author Hour Podcast for more interviews and insights into life-changing books.