How To Divide And Distribute Complex Assets With Stacy Francis

Welcome to our 2nd episode of The High Net Worth Divorce Playbook where we examine the intricate finances related to your divorce and the critical importance of understanding them and enlisting the right professionals to support and guide you.

Today's guest, Stacy Francis brilliantly walks us through the complexities of Executive Compensation packages, the importance of assessing the business’s value if you or your spouse own one as well as understanding the worth of alternative investments such as Hedge funds and private equity investments. Stacy explains how to determine which real estate properties to keep and those that should be sold.

Stacy Francis is a nationally-recognized financial expert who attended the New York University Center for Finance, Law and Taxation, where she completed the Certified Financial Planner™ (CFP®) designation and she comes with over 18 years of experience in the financial industry. Stacy is a Certified Divorce Financial Analyst® (CDFA®), and a Divorce Financial Strategist™ . She is also one of twenty of the nation’s leading wealth managers on CNBC’s Digital Financial Advisor Council and she frequently appears in media outlets such as CNN, PBS, The Wall Street Journal and USA Today.

You can reach Stacy here:

Read her white paper, Unveiling the Unspoken Truth

Listen to her podcast, Financially Ever After

39 Broadway, Suite 1730 | New York, NY 10006

O: 212.374.9008 | F: 646.219.6799 | W: www.FrancisFinancial.com

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Listen to the Podcast here

How To Divide And Distribute Complex Assets With Stacy Francis

Welcome back to our second episode of the High Net Worth Divorce Playbook. Our last session set the stage for how to negotiate with mastery. We examine the intricate finances related to your divorce, the critical importance of understanding them, and enlisting the right professionals to support and guide you.

With me is Stacy Francis, and she brilliantly walks us through the complexities of executive compensation packages, the importance of assessing your business's value, and how to evaluate the worth of alternative investments, such as hedge funds and private equity investments. Stacy also explains how to determine which real estate properties to keep and that should be sold. Stacy is a dear friend of mine. She is a nationally recognized financial expert who attended the New York University Center for Finance, Law and Taxation, where she completed the Certified Financial Planner designation.

She comes with over eighteen years of experience in the financial industry. Stacy is both a Certified Divorce Financial Analyst and a divorce financial strategist. She's also one of twenty of the nation's leading wealth managers on CNBC's Digital Financial Advisor Council. She frequently appears in media outlets such as CNN, PBS, The Wall Street Journal, and USA Today. I'm thrilled to have you with us. Welcome, Stacy.

Thank you, Karen. I am excited about this topic and so honored that you have me as a guest.

Navigating High-Asset Divorces: What You MUST Know

Stacy, the thing that I'm excited about in this conversation is your deep understanding and experience with the High Net Worth readers and being able to kick off the series and provide the landscape of information that anybody reading in wants to attend to as they enter divorce. We were talking before, and I think one of the places you talked about starting was determining what asset is best for you and your future. Let's just launch this with a broad scope and then dive into the granular details.

That sounds great. Karen, there are a lot of similarities in all divorces. Having a divorce, whether you have millions or potentially multi-millions, you're facing a lot of the same issues as someone who is getting divorced who doesn't have that. When you are dealing with more assets, you actually need to do a few more things. For example, you have the additional burden of really understanding these assets.

For higher net worth individuals, we tend to see that their assets can also be a little bit more complicated. Our goal is to empower everyone reading with the knowledge that you need to make really good decisions for you, for your future life, for your family, and to understand each asset that we're going to talk about. The risks of that asset with the growth potential.

Is it something that you expect to grow phenomenally over the next several years or have a very low growth rate? That could definitely impact whether or not it's the right thing for you and how to plan your life. Also, the one thing that so many of us forget, Uncle Sam doesn't go away. Making sure that you're empowered to understand the tax impact of all of these assets, because everything we're going to be talking about has what I call a different tax DNA.

The one thing that so many of us forget is that Uncle Sam doesn't go away.

All of this information, while it's going to be a lot, what I do promise is that we are going to go through it in a way that is understandable, that you're going to walk away having much more information, feel empowered, and be able to really make good decisions. I know Karen, that's what Journey Beyond Divorce is all about of empowering so that people can make good decisions and live the happiest life they possibly can.

Choosing Your Divorce Dream Team: The CDFA Advantage

Before you even dive in, I think it's so important to talk about the team. For those reading who either have money fear, or you haven't been the person who's been tracking and really aware of all the details of your finances. It's so important to partner out with someone like Stacy who lives and breathes and understands this. On top of all of the other emotional challenges that you're facing, you have that person who knows what you might not know so well. Even though you're going to take a lot of details, I just want to say how important it is to also partner with a financial expert who can hold your hand through this and guide you through the entire process.

Thank you for saying that. I'll share with the individuals, everybody reading. What you're going to be needing to do is look for someone that has what's called a CDFA, Certified Divorce Financial Analyst. This is an expert who has worked in the area of divorce and understands the unique complexities, taxation, and all of the financial aspects of divorce. What you're going to be looking for as you're going out there to find that ideal financial advisor to step through this journey of divorce and beyond is someone that has expertise in this area.

If you can believe it, Karen, a designation. It's called a CDFA, a Certified Divorce Financial Analyst. This person has done additional coursework and has ongoing accreditation every single year of continuing education so that they can understand this specific nature of divorce, how to protect you, and the tax impact. Everything that you need to know to make sure that you're making good decisions.

We can go into more detail about that, but note that as you begin to listen, don't feel like, “I'm not getting all of this.” We're going to help you find the right person.

I agree with you because I know. I feel when I go to the doctors and it's just not my area of expertise. I've had two knee surgeries, and the terms that my doctor was using while, he's wonderful, it were far beyond me. The thing is, I don't need to become a doctor to be able to get a great knee surgery and a great result. I need to hire the right doctor. It's the same thing with divorce. You need to have some education, and that's what we're going to be doing, but you don't have to become a Certified Divorce Financial Analyst yourself.

It’s well said. I love the analogy. Let's dive in. What's the math? Where do we start with this, Stacy?

Unveiling Stock Options: Decoding Executive Compensation

There are a lot of assets that high net worth individuals have, but what we're seeing more and more frequently is what we refer to as executive compensation packages. The most frequent we see are what's called Stock Options. Stock options are quite a few out there. Fifteen million employees have stock options. What's unique about stock options is that you wouldn't necessarily see them on a tax return.

You wouldn't see them show up even in a paycheck. You have to do a little digging to see if your spouse has this plan. If you are an employee and you have this plan, you need to reach out to your HR to make sure that you get a statement of these benefits. How stock options work is actually very much the way what they're called, their stock, and then the word options. What they are is they're an option, an option to buy a stock in the future at a certain price.

Let me give you an example, because this is the best way. Let's assume that you are the employee of Amazon and you started working there five years ago, and Amazon really values you, and they gave you stock options five years ago. Five years ago, on January 4th, the price of Amazon stock was $607. Now, if we look at the stock price and it changes day to day, but it's close to well over $3,000 now. That's a huge appreciation for the last five years. Someone who had a stock option would make a really tidy profit.

Let me show you how the Amazon stock option works, and actually, any stock option works. Five years ago, you got a stock option with a grant price, or another word, they might call it is a strike price of that $607 that we talked about. Essentially what the value of the stock was that day. What's amazing is that they said, guess what? When this stock option vests, meaning that you can use it and it's yours outright then, you can buy an Amazon share for $607 versus having to pay the price.

As we know, the price is upwards of $3,000. I grew up having coupons, and we would go and we would be able to buy toilet paper, two for the price of one. This is in some ways even better than this. You're paying $607, but you're getting an asset that Amazon stock that's valued at over $3,000. It can be very lucrative. That's what options are. They can be unbelievable wealth generators because what happens with a lot of these stocks is they go up. Most of the companies that you see with stock options tend to be like Amazon's, they're pharmaceuticals.

Stock options are unbelievable wealth generators because what happens with a lot of these stocks is they go up.

A lot of pharmaceutical companies, such as Pfizer, Moderna, have stock options and give them to employees to keep them incentivized to work hard and help raise the stock price. Internet companies. These are all companies, especially over the last ten years have seen their stock prices double, triple, quadruple, and more, as we see with Amazon. This is important. Now, something that I did mention, Karen, was that I talked about when it vests, and I want to talk about that because it can be confusing.

I was just going to jump in and ask exactly that question.

Have you ever heard of golden handcuffs or anything like that? I don't know if you've heard that term before, Karen.

Very much so, yes.

These are golden handcuffs. They're handcuffs, boy, are they brassy and beautiful. What do employers do? Amazon is pretty smart. They say, “We're going to give you this option, but it's not going to vest for, let's say, five years. You have to sit there and twiddle your thumbs and continue to be employed by Amazon until it vests. If you decide you're going to go to the competitor, Microsoft, and leave Amazon in the dust, Amazon is going to take away that stock option, and you're going to leave a ton of money on the table.

That's what we call about golden handcuffs. You can forfeit this if you're terminated for cause, if you leave for another job. We've even seen in the news clawbacks where news in the press of companies doing, unfortunately, not very good things, clawing back executive compensation like this from some of their top employees. It doesn't mean that it's automatically yours. The reason why the best thing is important is that not only it's because if they leave before they forfeit some of it, but also the percent that is considered able to be divided up in your divorce can also be attributed to the vesting schedule.

I don't want to get too detailed about that, but it's important for you to know that if there are stock options, get the vesting schedule and make sure that you're working with a lawyer as well as a Certified Divorce Financial Analyst that can help you determine what portion of those stock options are still going to be marital that you can have access to and what portion unfortunately are now going to be considered separate property.

That's actually determined from what I'm hearing you say that's determined by the company's policy.

Exactly. The typical vesting period for stock options is anywhere from 3 to 5 years period. There are different types of vesting. There's something called a cliff, where after three years, it's 100 % vested. They have another type of vesting schedule, where it's called graded. It's exactly what it sounds like. If it's a five-year vesting schedule, then 20% vests in one year. Another 20% in year two, 20% in year three, 4, and then 5 when you have it all.

It means that let's say if you leave in year four, you are able to walk away with 80% at least. The other 20%, unfortunately, you're saying goodbye to. This has an impact on how much you're entitled to that's considered marital. There are also some unique fine wrinkles about where these stock options were given to you or your spouse because of past performance, which would be considered marital, or were they given to either you or your spouse as an incentive for future performance?

This can be murky, but that's why you need to make sure that you get the right documents to be able to get this information and the right documents. Employee letters are going to talk about stock options. Often, employee letters will say, “You're getting stock options because we want you to stay with the company and incent you.”

For example, my husband moved from Credit Suisse to BlackRock. BlackRock wrote in their document, “We're giving you stock options for past performance.” The reason why they did that is to incent and get Michael to move to the new company. They said, “All those stock options you're giving up by leaving Credit Suisse, we're going to give you new stock options and we're going to make you whole.”

That is considered marital property because he earned that right when we were married. He earned that while we were married. That was really for his last job. These are details here, but can it make a difference? Again, you need to know all this information. Your lawyer needs to know this information and make these determinations, and help you, as well as your divorce financial analyst.

I just want to be really clear here. You're not talking about a separate attorney. You're talking about having a matrimonial attorney who is knowledgeable and can help find out this information.

Yes. That is why, in particular, you need to have a great matrimonial attorney. We all know that that's one of the most important people in this whole process, especially if you're dealing with complex assets like this, you need a matrimonial attorney who actually has worked in high net worth divorce before. This for them will be old hat. They can talk about this over a cocktail. Maybe even after they've had one or two cocktails, and they're very comfortable and familiar with it. Whereas someone who hasn't worked in this arena before may not have come across stock options. That's most likely not the right attorney for you, then.

Thank you so much for bringing that up. We do have an episode specifically on making sure that you have the right attorney if you're in this high-net-worth category. You can look for that in our schedule for this series. Anything else on stock options before we move on?

One small thing. We talked about the positive. We talked about Amazon. We talked about how the price of Amazon has gone up, and the stock options are worth so much. We've worked with employees where they worked at Macy's, and Macy's has had a different experience. They received stock options, and the price of the stock at that time, five years ago, was worth a whole lot more than we see.

Those options are what's called underwater. If you think about it and visualize underwater, no one wants to be underwater, especially not for a long time. While they look like they have no value. They actually can have value. The reason why there's a formula that you can use to calculate that, even if the exercise price is $50 and today it's only trading at $45, meaning like, “That's not valuable for me.

I'm not saving any money by actually exercising the stock.” It still can have value. That's something for individuals to know, too. Again, why do you want to make sure you work with the right financial advisor to do that calculation? Now there's another one. I don't know if you've heard of restricted stock awards or restricted stock units before. It's newer. There might be fewer people that have heard of that. Have you heard of that before, Karen?

I have, but I couldn't articulate what that means very well. Do tell.

Restricted Stock Awards: Golden Handcuffs & Tax Implications

Restricted stock and restricted stock units, we're seeing more and more. Stock options like ten years ago, it was the most fashionable thing to be able to give to employees from corporations. That's changed. The new black or the new fashionable, I don't know, maybe it's stretchy pants now since we're in COVID, but the new fashionable thing is actually giving restricted stock.

Restricted stock is actually what it sounds like. It's stock that they're going to give you. You're going to have stock. Not the option to buy in the future, but you have stock, it's restricted stock. There are some restrictions and how we talked about the stock options, having those vesting schedules. Guess what? It's the same thing with these guys. There are vesting schedules. You have this beautiful Amazon stock. You're so excited. You cannot wait to sell it, but you cannot. You have to wait until it's vested.

Restricted stock is stock that they're going to give you—not the option to buy—but you have stock.

It's considered gilded handcuffs because if you leave your employer, if you are fired for doing something naughty, you essentially forfeit your right, and you don't get the stock. That's something to know as well. We are seeing very large companies and even some smaller companies giving restricted socks. I'm going to share this with you. I think this is fascinating. One of the biggest companies that awards restricted stock is Amazon, but they give restricted stock not only to their most senior employees, but their hourly workers as well.

Those Amazon delivery individuals, a good number of them, are getting restricted stock, too. It's not just the high net worth arena. We're seeing companies using this as a wonderful way to compensate employees all through the rank and file. This is important to know. Same thing, often a 3 to 5 year resting schedule is graded, which is as we talked about over time or cliff, meaning that you have to wait three years and then it all becomes 100% vested and you can sell it. What's really important to know about restricted stock and also about stock options is that it's not a free lunch.

When we started talking, we talked about the things you need to know about these assets. We talked about the risk that you could potentially lose them. We talked about the growth potential that there's a lot of growth potential because it's often internet companies or pharmaceutical, but we also promised that we're going to talk about taxes. That's what I want you to know about restricted stock units. If you have a restricted stock unit in Amazon and it vests, you're going to have about $3,000, and that's pretty phenomenal.

In reality, what you're going to walk away with is probably only closer to about $2,000. That's because Uncle Sam is going to be standing there waiting for you to pay him his share as soon as this Amazon stock vests. That's important. When you look at restricted stock account or stock options, and you might see a million dollars in that plan, I don't want you to fool yourself that it's actually a million dollars. After Uncle Sam takes his share because it's ordinary income, and it's taxed at your highest tax bracket.

You may only be walking away with 60% of that, and 40% going to Uncle Sam. That million dollars can be quickly dwindled to as little as 600,000 and even could be more, depending on your tax bracket. Karen, that's something that's important to understand about these assets. What you see on the face, while it may look good, you need to think about, “What is this really after tax?” If you were to take and say, “I'll take the million-dollar restricted stock units that I earned through my company. You take the million-dollar house.” It's not even or fair, really, to either of you. Does that make sense?

It does. I think that that's one of the biggest things where an expert like you comes in, that two assets can have the same value, but they're not at all apples to apples. That's what I hear you saying.

It's like they say, “Don't judge a book by its cover.” You don't know what's really between the bindings and between the covers. It's the same thing with these assets, too. It's really important to look at, “What is the after-tax amount?” The other piece on the restricted stock. Again, that full $3,000, the value of that Amazon share, you're going to pay ordinary income taxes upwards of 40% or more at the highest tax bracket.

Don't judge a book by its cover—you don't know what's really between the bindings and between the covers.

The way that the stock options work is a little different. The amount that you pay taxes on is the difference between the strike price and that grant price. If you remember, we talked about it in this scenario, with Amazon being about $607, and the price of the stock when you exercise it. You're essentially getting that $3,000 stock and only having to pay $607 while the government wants their fair share.

The difference between that $607 and the $3,000 or so that we talked about it's about $2,500. That $2,500, the difference, the money that you make, you're going to pay taxes on that upwards of 40% or more. That's also really important. You just want to make sure that, again, no one is surprised by this.

You've talked about this, that it's written in your agreement of who's going to be paying taxes, and make sure that there's no surprises, because no one wants surprises. You don't want to get one over your spouse by having them not understand the taxes. Number one, it's not the right thing to do. It's not the ethical thing to do, but it also means that you're most likely going to end up back in court. Who wants that? No one wants that.

I can see how complicated this ends up getting, especially for the person who hasn't been overseeing and managing the finances. This is really helpful. Once we go beyond, are there any other parts of that executive package that we need to touch on?

There's another piece. Division can get messy. Restricted stock units and stock options are not like a checking account. You cannot split it. You cannot transfer it to the other person. When you read through the documents of these plans, the employers don't let you transfer these assets to someone else. They have to stay in the name of the employee's spouse. That can get pretty messy if the document that's been written, the legal document your lawyer wrote, said, “50% of the restricted stock unit account to be transferred to spouse, so and so.”

Division can get messy. Restricted stock units and stock options are not like a checking account.

If that does happen, you're going to have a big problem because that's not allowed. It's not legal. Your lawyer will want to read through the plan documents to understand how can you transfer the assets. The typical way is that they're held in what's called a constructive trust at the employer for the benefit of the other spouse, who's the non-employee spouse. Then once they vest, they can then transfer them out of the employer to the employee into any account that they want. This is one of those tricky issues that you do want to be careful of as well.

Most matrimonial attorneys are very good at crossing T's and dotting I's and making sure that everything's correct. Stacy, what I hear you saying is that even the best matrimonial attorney, if they don't have significant experience working with high net worth as good as they are in all other aspects of that settlement agreement. This could be a place where their client is potentially at risk.

It's very easy. You can just ask, “How many cases have you worked on where there's been restricted stock units or stock options?” Just ask that question. If they say, “A few.” That gives you your answer that you probably need to work with someone else. There's a lot with employee stock purchase plans. The other thing I just say is to ask the question if there are any deferred compensation plans.

This is a little different, but instead of receiving your salary, you can say, “Pay my salary to me in five years or pay this percent of my salary to me in three years.” That's not going to show up on the tax return, it's not going to show up in a paycheck. You'll want to ask that question to say, “Are there any deferred compensation plans?” My husband and I do that. I know people do it.

Sometimes there's some what we call divorce planning, where someone who tries to be a little sly, defers their compensation to a date that they know they're going to be divorced. That's pretty naughty. I feel like there's a special place in hell for someone who would do that. Just ask the question, “Are there any deferred compensation plans?”

There’s a special place in hell for someone who would defer compensation to avoid sharing it in divorce.

Business Valuations in Divorce: Don't Overlook This Asset!

What's another tip we want to talk about?

The business is really important. I'm going to make it very clear. We do not do business valuations. That is not our expertise. If someone comes to us, this is one of those important team members that you would want to be part of your team. Someone that could value a business. What I would say, which is important, a lot of individuals will look at a business and either themselves or their spouses and feel like, “It doesn't have a value.”

It revolves around your spouse running it. If God forbid your spouse didn't show up one day, the business would go under. It doesn't mean that that actually doesn't truly have a value. What I would say with the business, just make sure that you speak with your lawyer and you have a real frank conversation about, “Is there a value?” If so, then make sure you get the process evaluation done. Evaluations don't necessarily have to be expensive.

You can try and work with someone who gives you a decent fair market value, maybe not down to the penny, but that you can work with. You can sometimes even hire someone who's neutral to work for both of you to try and make it more feasible, as far as the costs. Just don't forget the business. I'm saying this from my personal situation.

My husband and I are happily married, but if we got divorced, he would be fully entitled to a value in my business. The value of my business, Francis Financial, is worth more than all of our assets combined. As much as it would pain me, because I feel like Francis Financial is a child. I've given my life for this company over the last two decades, but he's made a lot of sacrifices too. He's truly entitled to that.

Even though the business I started, I'm a 100% owner, he's entitled to some of this business. Not a 100%, not even 50%. Typically, what we see is the spouse receives anywhere from 10% to about 30% of the value, depending on how long they've been married and when the business was started, maybe depending on how active their role was in the business. These are all things that will be discussed. Again, just making sure that the business is an asset. It truly is an asset, even if you don't feel like it is. It most likely has some type of value.

To that point, there is a specialist, it's a forensic accountant, and we also have someone in that position speaking to you through this series. You can tune in to that episode as well. When you have your own business, it's a lot of different areas where finances can be, I don't want to say hidden as in a manipulative way, but that there are many layers, aren't there?

Yeah. If I wanted to be naughty, I could decide I'm not going to pay myself and I'm going to make my salary lower. Instead, I'm going to increase the expenses of my business. I saw this once, where all of a sudden, payroll went up by double. I couldn't figure out why I was looking at it. It turns out that this accountant, this was an accountant, what he did to reduce his salary was then pay his mistress three times her normal salary. She gave it to him. It's like Jersey housewife, some of the things you see, but there's a lot that can be manipulated.

The biggest manipulation we see with businesses of people behaving badly is in the business, increasing expenses significantly, and trying to manipulate it so that it looks like there's very little profit in the business. The poor business owner cannot take anything home. That's where you want a forensic accountant. For a lot of high network divorces, not all, but that is often a very valuable person to at least take a preliminary view to make sure that nothing looks odd or fishy, and everything. All the numbers add up, and that one plus one really does equal two, and everything's okay.

I've had a couple of clients where what was on paper or what their spouse, who was the high earner, was saying was so out of alignment with the lifestyle that they were living. It's like, if all of that is true, how are you living this lifestyle? If you're in a situation where you just don't know and you have a lot of money fear, I just want to say it's so important to invest in the professionals who can help you see what's real so that you can make good decisions.

When you're going through a divorce, and especially if you're in this high-net position, you want to make sure that the settlement that you create is going to support you and your family for the rest of your life. If your intuition tells you something seems awry, regardless of what you're soon to be exes are saying, speak to the professionals and invest where you're advised to invest because that's going to be a good investment.

You said it perfectly.

Private Equity & Crypto: Unlocking Hidden Divorce Assets

What's next? What else do we want to leave our readers with?

A lot of high net worth marriages, you'll see different types of assets that maybe are not as familiar as a checking account or a brokerage account with stocks and bonds. A lot of times, they'll invest in companies that are not public. A company that's publicly like Amazon, you can go and buy a share on the stock market. Companies that are not public, like Amazon, they're often smaller companies. In fact, Francis Financial is not public.

For some companies, you can buy a share, but it's private. It doesn't have the same transparency as being able to go on Google and say, “Guess what? Amazon is trading at $3,126 per share.” You don't have that. There's no public market where you can get that information from a private equity or private company that you might have a share in. I've seen some individuals feel like, “Since we don't really know what it's worth, why don't you just keep all of the private equity investments?

I'll take the check-in account. It has $10,000, but at least I know it has $10,000.” When three or four years down the line, that private equity company either goes public or they're purchased. Those $5,000 shares that you didn't know the value of, all of a sudden become a million dollars, $2 million, or even $3 million. The other spouse has taken the $10,000 checking account. While getting a value for them can be extremely difficult, know that there is a value.

What we often see is that the best way to deal with this type of asset is just to split it half and half. Both of you are taking the risk. Both of you get the upside of the growth if there is growth, and you both are receiving the same tax issues with whatever it is. That's something that I would recommend but just please don't poo poo the value of these private equity investments. You may not know exactly what it's worth, but make sure that you give yourself the opportunity to benefit from that.

Ideally, again, just doing it 50/50 is the most, I think, has the most integrity of being able to deal with it. It's the same thing with hedge funds. Hedge funds are easier to price out to be able to understand the value. Often, we see head funds couples just splitting the value of the fund and each person going their own way with a new account in their own name. This has been in the news a lot, blast Bitcoin. The good news about digital assets is that this is the second year where you are forced to report digital assets on your tax return.

Up until now, it was like wild lust. You didn't know who had a Bitcoin or a digital asset. You didn't know how much it was worth. They definitely weren't reporting it on their tax return. Things have changed. That's good. It's harder to hide money this way. Looking at cryptocurrency, it does have a lot of risk associated with it. You do want to understand the impact of this. Let's say you're looking at a million-dollar retirement account versus a million dollars in Bitcoin. The retirement account may be the right thing for you.

Again, make sure you remember that retirement account. Every dollar taken out, you're going to be taxed at ordinary income. You're going to say goodbye to 40% plus. Now, Bitcoin, you could be saying goodbye to just as much. My husband and I have quite a few Bitcoins. We bought them, if you can believe this, at $10 a share. I think the last time I looked, they're at $26,000 per Bitcoin. You can only imagine what our tax bill will be.

Essentially, we're going to have to pay almost $26,000 in capital gains. Capital gains are not at ordinary income. It's not that 40% amount. It's about 28%, but that's still a big number, paying 28% plus on essentially $26,000. Again, just understanding what was the cryptocurrency bought for? If it was bought recently, then there may not be a whole lot in gains that you have to worry about, but if it was like myself and we bought it a long, long time ago, we wish we had bought more.

We only bought five bitcoins, which I kicked myself for. Why didn't we do more? It is what it is. For us, when we sell, we're going to say goodbye to so much of that money. Again, being smart about the tax impact of some of these things. The good news again about cryptocurrency is that it's getting much harder for people to be naughty and not disclose because you can look at the tax return. If you're not putting it on the tax return, then you're breaking the law, and they're the IRS that you're going to have to deal with.

That's important to know. As we said, private equity, you may not know the value, but it has value. Make sure you don't just poo poo it. Hedge funds typically state their value more frequently. Hedge funds are often split. They do tend to have a little bit more risk along with private equity. The other high-risk asset is typically cryptocurrency. Again, for all of these, understand what they bought for so that you understand what is the real tax ramifications of taking this asset.

Would you say that, on top of a professional like yourself and a forensic accountant, if necessary, where does having a CPA on your team comes in in this situation?

A lot of CDFAs do a good amount of the accounting work. We have beautiful, fancy software that makes us look smart, Karen. It calculates all the tax implications so we can run tax reports. You are going to want a CPA and ideally a CPA that you feel comfortable with, because you're eventually going to have to file your own taxes. For a lot of individuals, they haven't filed taxes on their own for many years.

It can be a little overwhelming and frightening. If you do need to do some of these in-depth calculations, you do want to get a CPA involved. Our software is great, but if you have a court case and you're going to be presenting information to the judge, at that point, you probably want a CPA who lives and breathes and eats taxes for breakfast to be able to do that calculation and show it.

Real Estate & Divorce Emotions: Financials First!

I know there's so much more we can talk about, and we're limited on time. Stacy, what else do we want to cover here before we wrap up?

This is my favorite topic. With high net worth, there's real estate. I love real estate. I'm doing this wonderful podcast from my ski home on Stratton Mountain in Vermont. We have a wonderful condo in New York City. Typically, you have your primary home, and you have a vacation home. You might even have two vacation homes. What I know about real estate that I think is true for many people is that real estate is a different asset.

I don't get warm and fuzzy when I hug my 401 (k) or I hug my restricted stock units. My home gives me peace and it gives me warmth, and it gives me happiness. While that's wonderful, I want to bring it back to also balancing that with what is best for you long-term. Sometimes our emotions around real estate, our second home, and how much we love it, and sitting on the beach and watching the waves come in, or down on the ski hill, and being able to jump out and go skiing.

Sometimes our emotions around real estate can cloud our vision of what's best for us financially.

Sometimes those things can cloud our vision of what's best for us financially. That is my parting gift of advice of let yourself look at the numbers first, of whether or not you truly can afford to financially support the value and the ongoing upkeep and costs of that home before you let yourself fall in love with the idea of having it happily ever after in your life.

Many times it works, but sometimes it doesn't. The challenge is that when you're in your 80s and you don't have enough money to be able to live the life the way you deserve, those four walls aren't going to be able to do a whole lot for you. Again, just making sure that you're not going to deplete your retirement accounts, your brokerage accounts, your nest egg, to keep a house that is too much house for you for the long term.

That's so important. In our last episode with Gabrielle Hartley, one of her key things that she said was, “Enter your negotiation with your rational mind, not your emotional mind.” When it comes to your home, it's so easy for the emotions to take over. It's so important to know that ahead of time, and like you said, focus on the numbers. What's in black and white, and make your decisions accordingly.

I would say, Karen, it's the hardest thing in the divorce process. It is. It hurts me every time I say this, but it's a business negotiation, and it feels so wrong and dirty that a marriage would come to that. You do need to go in with that rationale to make sure that you're making good financial decisions because you're making decisions that aren't just going to impact you for the next year. They're going to impact you for the rest of your life, and actually your children. Trying to as best you can go in and figure out what's right financially, and then build the best life you possibly can around that.

Beyond The Legalities: Emotional Divorce & Thriving After

I just want to tag on to that. Many of you are feeling so much emotion. It's hard to imagine that you're going to get to the other side of this, that you're going to be liberated from all the grief and the struggle, and that you're going to be excited about the next chapter of your life. Yet, we at Journey Beyond Divorce have been working for over a decade with men and women who enter in fear and resistance and emerge. They thrive on the other side.

There's the legal divorce and all of those finances. There's the emotional divorce, detaching and allowing yourself to look for the next open door. You will be there. When you get there, you want to make sure that the settlement agreement that you've negotiated is going to support you going forward. This has been so incredibly helpful and valuable, Stacy. I want to thank you so much.

Thank you. I love this work, and I love what you do as well. Again, what we have found in working with individuals over the last few decades in this area. The team is so important, and divorce coaching and support are so important. We see a huge difference in how people travel through the divorce journey and how they come out at the end, and having the support of a coach coming out more whole, more financially sound as well. I know you're not dealing with the finances, but you're helping individuals have that ability to move beyond the emotions to do what's right. Very excited.

Thank you for that. Our desire is that you, and that's the whole goal of this Journey Beyond Divorce podcast, is that we want you to be calm, clear, and confident in everything you do through divorce, so that on the other side, there's no regret. There's only forward-looking and the next chapter, and a lot of excitement. This has been a robust and thorough 101 on what you need to know if you're divorcing in the high net worth category. Can you just tell our readers, number one, how they can find you? I know you also have a free giveaway for them. Let's cover that before we say goodbye.

Great. Everyone can receive a copy of what's called Financially Ever After. We interviewed 150 individuals going through divorce and asked them, “What would you tell your dearest friend of what you did right and what mistakes you made?” We have a copy for that for all of you. It’s important and helps you navigate the ups and downs, and even ask questions that maybe you didn't know to ask. That's something.

Also, we have a great questionnaire that you can use of how to find the right financial advisor to help you through this process. Not all Certified Divorce Financial Analysts are the same. Some have that designation, and they've had it for years, and they've worked on 2 or 3 or 4 cases. Others have worked on hundreds and work more in the high net worth arena. Again, you want to be able to make sure that you're working with the right person.

We'll send that to you as well, so that you have that resource and you can go to our website. We've got a lot of great resources here at Francis Financial. Our website is www.FrancisFinancial.com. We also have a podcast. In fact, Karen was one of my heroes and mentors in starting the podcast a couple of years ago. You can look at that. Financially Ever After is our podcast. There's a lot of great content, particularly financial topics and high network topics that you can peruse and listen to as well.

A lot of great resources, please check them out. If we can help support you in any way, that's what we are here for. We work with individuals going through the divorce process hourly, and then we work with individuals afterwards with wealth management, financial planning, investing, and making sure that their money is growing over time.

Stacy, one last point. Geographically, do you have any limitations?

No, we have clients everywhere. England, Singapore. We have clients all over the United States. We're a pretty large firm. We manage nearly $400 million. We're too big for New York State to actually regulate. The Securities and Exchange Commission, the SEC, regulates us so that we are able to work in every single state and pretty much every single country. It's wonderful. I know that COVID is very difficult, but we've always worked and been able to work online with our clients. It hasn't been much of a shift for us, so we can work with clients anywhere like you. You have clients everywhere, right, Karen?

Exactly. I just want to say for those of you who've been listening through our various series, Stacy Francis is one of my very favorite colleagues. She has an incredibly big heart. She is deeply integrity-based. As you've now heard, so well schooled in high net worth. If you're reading and you need somebody, Stacy and her team, I would definitely say reach out, listen to the podcast, grab the free giveaways and and put a call in because you would be in very good hands. Stacy, thank you so much for your time.

Thank you for sharing your wisdom and advice. It's been incredibly helpful. Have a great day, and everyone wishing you the best in your journey.

Thank you. Stay tuned for our next episode next week.

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Thanks for joining us on the show. I hope you found guidance and encouragement to help you along your journey. If you like my show, please take a minute to subscribe and leave a review on iTunes. You can also visit us at JBDDivorceSupport.com, where our team of coaches supports both men and women throughout one-on-one coaching, group programs, online courses, and free resources. Stay tuned for our next episode, and I'll talk to you soon.

Important Links

• Stacy Francis on LinkedIn
• Francis Financial
• Gabrielle Hartley
• Financially Ever After
• Financially Ever After Podcast
• Francis Financial on Facebook
• Francis Financial on X
• Francis Financial on LinkedIn
• Francis Financial on YouTube
• Unveiling the Unspoken Truth
• CNBC's Digital Financial Advisor Council
• Free Rapid Relief Call