Protecting Family Wealth, Real Estate & Inheritance: Prenup, Postnups for Peace

This is a recording of an Online Webinar presentation in which Scott Levin and Daniel Yasharel provided insight to other attorneys, financial experts, and families navigating marriage, separation, divorce, property, or inheritance decisions.  

Presenters:

• Scott Levin CDFA Esq -  California Prenup Attorney Expert — Divorce Mediator (not practicing law) - Certified Divorce Financial Analyst
• Daniel F. Yasharel, MSFS, CFP®, CDFA® — Wealth Advisor & Certified Divorce Financial Analyst

You’ll Learn:

• How California’s community property laws impact family real estate and inheritance
• The difference between Prenups and Postnups — and when each is appropriate
• Common real estate issues in divorce and how to resolve them fairly
• Strategies to safeguard family wealth and minimize future disputes
• Real-world case studies and actionable next steps

Who Should Attend:

• Couples who are engaged or newly married and want financial clarity
• Married individuals seeking to protect inherited or family assets
• Homeowners and real estate investors in community property marriages
• Individuals contemplating separation or divorce who want to understand their financial options before making major decisions

We dig into how California’s community property rules collide with real estate, inheritance, and retirement, and why prenups and postnups create clarity that courts rarely do. We show how mediation and a CDFA protect families from avoidable tax traps, buyout mistakes, and commingling.

• defining community vs separate property in California
• how commingling wipes out separate property claims
• real estate pitfalls with title, refinancing and buyouts
• inheritance protections and tracing burdens
• retirement accounts, QDROs and IRA transfers
• mediation steps that cut time, cost and conflict
• using a CDFA for tax-aware, long-term planning
• structuring fair, enforceable prenups and postnups

We will follow up with an email. As far as the survey. And also, if you have any questions, you’re more than welcome and free to contact us.

For further information and details, you can read our articles on related topics or contact California postnuptial lawyers who care: 

San Diego Divorce Mediation & Family Law
9820 Willow Creek Road, Ste 410
San Diego, CA 92131
858-255-1321

Thanks for listening and I hope you'll continue to learn more about how you can peacefully divorce.

As a divorce mediation attorney in California, Scott Levin helps couples figure out the settlement terms and draft enforceable settlement agreements so they can divorce fairly without needing to go to court. Obtain closure peacefully through an amicable divorce. process that protects families and kids.

Visit San Diego Divorce Mediation for more information and to learn more about our mission to help divorcing couples make informed decisions and fair agreements through mediation or book a free virtual consultation.

Scott Levin, attorney, mediator, CDFA®
Chief PeaceKeeper
[e-mail]
858-255-1321
San Diego Divorce Mediation & Family Law
www.SanDiegoFamilyLawyer.net

Episode Transcript

SPEAKER_00 (00:02):
Good afternoon, everyone.
My name is Erica and I'll bemoderating today's session.
Before we begin, please notethat this webinar is being
recorded for compliance andrecord keeping purposes.
All attendee identifyingfeatures have been disabled to
protect your privacy.
Your video, audio, andparticipant information will not
be visible at any time.

(00:22):
For questions, please use thechat and direct your message to
hosts and panelists.
Our moderator will reviewsubmissions and may read
selected questions aloudanonymously.
By staying on, you acknowledgeand consent to the record to the
recording of the session.
Thank you.
I'll now turn it over to ourpanelist, Daniel Ferrud
Yasharel.
He's a certified financialplanner and certified divorced

(00:44):
financial analyst with over 40years of experience.

SPEAKER_01 (00:48):
Thank you, Erica.
I'm very excited to introduceour guest expert today, Scott F.
Levine, an award-winning familylaw attorney, mediator, a
professor at law school, and thefounder of San Diego Divorce
Mediation and Family Law.
Scott is one of thehighest-rated mediation
attorneys in California, knownfor his five-star practice and

(01:12):
his commitment to helpingcouples reach peaceful,
cooperative agreement withoutlitigation.
After years in traditionalfamily law, Scott chose to focus
entirely on mediation because hebelieves families, especially
children, deserve solutionsbuilt on collaboration rather
than conflict.

(01:32):
We are honored to have him withus today.
Scott, the show is yours now.

SPEAKER_02 (01:37):
Thank you, Daniel.
Thank you for joining us,everybody.
I think you probably just heardthe most professional part of
the presentation today.
But Daniel, you uh always lookgood and sound great.
Um so we're here to talk aboutum divorce in California, how

(01:58):
that intersects with real estateand inheritance and protecting
your wealth, and basically howprenups and postnuptial
agreements can help youstructure your own uh divorce
outcomes at a time when you'reum collaborating uh, you know,
and and thinking positivelyabout the future.

(02:19):
But um before I begin, let mejust say a couple things about
prenuptial agreements.
Um they are very important, andyou're gonna hear me talk about
you know a lot of the benefitstoday, but they are also
extremely important documents,they are not to be trifled with.

(02:41):
Uh, when I represent a lowerearning capacity spouse, right
now I have one or or um afiance.
Right now I'm representing awoman who's a nurse and and her
uh soon-to-be husband's adoctor, the agreements she's
making in her mid or late 20s,if they're married 20 years, are

(03:02):
gonna be immensely impactful onthe quality of her life going
forward.
So we're not gonna talk a lotabout spousal support and aka
alimony today, but uh, you know,if you put waivers in in your uh
prenuptial agreement that say,hey, I don't get spousal
support, or I live I agree tolimit spousal support, um, which

(03:25):
a lot of higher earning peoplewant the other to do, then you
should assume that's exactlywhat's going to happen in the
event that you divorce.
Um, and um that can be, I'veseen so many people be huge have
huge impacts on their life andquality of life, you know, 10,
15, 20, 25 years after signingthis document.

(03:48):
Um, and so it's just reallyimportant that you have good
counsel, that you have goodadvice, that you're thinking
about the future and playing outscenarios in your head when
you're negotiating thesedocuments because they should
not be signed willy-nilly.
Um, and I just wanted to mentionthat.
So we're gonna talk about a lotabout the benefits, but um, they

(04:10):
there are um pitfalls if they'reuh um you know not done in the
in the best way.
All right, so let me figure outhow to do this.
I'll share my screen here.
Okay, so generally speaking,nothing says romance like a

(04:34):
legal contract, right?
Um oh last thing before we startuh going into the substance.
If my wife is here, I just wantto mention to her that all of
her inheritance is separate procommunity property, no matter
what I'm about to say for herpurposes.
Uh that's uh community property.

(04:57):
Um, so why why why are we heretoday?
What what are we trying tounderstand and what are we
trying and how do prenuptial andpostnuptial agreements impact um
you know your situation in theevent of divorce?
Well, California.
Let me just say that again.
California.
For those of you who are here,do you want California law and

(05:21):
California family law attorneysto dictate how your divorce is
going to go in the future?
Most people don't wantCalifornia involved in their
lives.
And the default rules and lawsthat California has for divorce
are oftentimes vague.
And you can literally have twogood meaning, well-meaning,

(05:45):
smart lawyers look at the sameissue and legitimately have a
complete opposite of opinionsabout how that issue should be
resolved in a divorce.
So they are vague, there's a lotof vagary in California family
law.
And so you don't want to besusceptible to that vagary if

(06:08):
you can avoid it.
Um, and real estate inparticular, those are oftentimes
for my clients, those are thebiggest assets that they have.
And and how to divide their homeis is often the beginning and
the end of the divorce process.
We have to figure out how towhat to do with the home,
oftentimes before you can doanything about custody or or or

(06:30):
support, because you need toknow where you're if one of you
is going to live there or notafter the divorce, uh, or both
of you.
Um uh so you know, inheritanceand and real estate, um, really,
really, really important issues.
Um but and let me just give theframework too, sorry.

(06:53):
Uh in California, communityproperty is equally owned by
spouses.
And in California, communityproperty is all property
acquired during marriage.
And then there's separateproperty.
Separate property is owned bythe person, by the individual,
and it's not divided byCalifornia law in the event of

(07:14):
divorce.
And separate property is definedas any property acquired before
marriage or acquired duringmarriage by gift or inheritance.
The problem with separateproperty is that it can often
very easily become partly jointproperty and partly separate

(07:37):
property by what's done with theseparate property during
marriage.
If you take separate propertyand you put it into joint
accounts, that's calledcommingling.
And you can commingle yourseparate assets so that they are
no longer separate.
And it is so easy to do, and therules are very skewed towards um

(08:01):
all property being community.
So if you're a person that'ssaying, hey, this should be
separate property, the burden ison you to show all the evidence
about why.
Without that evidence, you don'tget it in court.
Um, and in mediation, you know,you still need that evidence,
you still need to show it.
If you show it, you can get it.

(08:22):
But try showing statements goingback 20 years on something when
you were weren't thinking thatyou were ever going to be
divorced.
Um, so uh a prenuptial agreementis a legal agreement that um
allows you to set the rules forhow your property will be
divided and defined in the eventthat you divorce later.

(08:44):
So in a prenup, you can say,hey, we agree that this group of
property, this these assets willalways be separate property.
So no matter what happens withthem, this house will be
separate, my property.
Your 401k will be your property.
Um, this you so you identifywhat's separate property, no

(09:06):
matter what's going to happenduring the marriage, that you
would get that back in the eventthat you divorce.
And so that can be setting updeciding decisions about how
ownership over uh uh houses,investment properties,
retirement assets, businesses,um, and and inheritance and
debts.

(09:26):
Uh, and and and also you candecide about you know how to pay
for living expenses during themarriage and how much you're
gonna contribute and how.
So you can really have a lot ofthoughtful conversations about
how you're how the how you youand your spouse will be living
uh financially during themarriage, but you're also really
collaborating about what willhappen in the event of divorce.

(09:49):
But it's not that you'replanning on divorce.
What you're trying to do is planout financial certainty.
You know, prenuptial agreementsand postnuptial agreements, they
remove uh like the financiallandmarks that weigh and damage
relationships over time.
So you're really protectingyourselves, your kids, your

(10:11):
futures by getting a prenuptialagreement and and and doing it
in the right way.
Now, when I see what I mean byright way is that we're not
trying to defeat the other tierperson.
We don't want to make, we don'twant to drill the other person
into the ground to the pointwhere they feel like they got a

(10:32):
raw deal.
If you're a parent of a childthat that you want to get a
divorce, uh prenuptialagreement, that um that other
person that they're marrying,you know, they're the mother or
the father of their of yourgrandchildren.
And they um and they will beresentful if they feel like they
were manipulated into aprenuptial agreement that wasn't

(10:54):
fair to them.
And I have a client right nowthat we met last night for
mediation, where she explainedthat she um never received the
prenuptial agreement that shesigned at 23 years old.
Now, this is she's in her earlyum 40s now.
Uh, never saw it before she wasexpected to sign it.

(11:14):
Her father-in-law got her herattorney and they were friends,
and she never met that attorneybefore the day she signed the
agreement.
Now, that is some a situationthat happens all the time, and
and it should not happen in yourcase.
You want the prenuptialagreement to be enforceable, and
so getting proper attorneys forboth sides and and having

(11:37):
really, really good discussionsand negotiations is what you
want.
You don't want to set this uplike, hey, take it or leave it.
It's you get nothing.
I this person gets everythingunder all conditions.
You have to negotiate, you haveto have give and take.
You're not trying to defeat theother person.
You don't want to set yourselfup so that the other person

(11:57):
feels like they need to divorceyou because they just can't
live, they just feel like theyknow that their prenup was
unfair and it just weighs on themarriage over time.
You're not trying to accomplishthat, you're trying to
accomplish positive results, notnegative.
Um so post-nuptial agreementsare the same thing as a

(12:20):
prenuptial agreement.
It's just a marriage, it's a anagreement between people that
are already married.
Um and so it deals with the sameissues uh and can bring um uh
finan basically most of myclients that get postnuptial
agreements, they feel that ifthis if this issue with their

(12:40):
finances could be resolved, thenthey could really have a
successful marriage.
But this but the issue that isbringing them to the table is so
important that it's weighingdown the marriage and it's
putting it at risk.
So, what does that look like?
So, for example, people thatinherit, like, you know, I have
a client that inherited$1.5million, and now um she's

(13:05):
worried that over time thatmoney might be spent on
community expenses, in whichcase she wouldn't get it back.
It she's worried that that moneymight find its way into joint
accounts with her with herspouse, and that that joint
account has both her inheritanceplus money that's earned during
the marriage, and that's so itwould be commingled.

(13:27):
So, so in order to protect that,you can have a post-nuptial
agreement that says, hey, nomatter what, that 1.5 million uh
will come back to this person inthe event of a divorce, so that
you don't have to worry aboutwhere that money goes or how
it's spent and and and feel likeyou're giving it up.
Uh so and then a very successfuluh so someone that has a

(13:51):
business that really took offduring marriage.
That's the other very commonscenario where um the the couple
is worried about what wouldhappen to the business if they
divorce.
Um divorces with businesses aremuch more complex often than
without businesses.
And so getting certainty aroundyou know who would own the

(14:13):
business, how it would work, uhuh uh how a buyout would work,
how you would set that up, whohas the rights to voting shares,
all those sort of details um canbe worked out in advance in a
post-nuptial and again relievethe pressure um uh on the uh on
the marriage.

(14:33):
So the one really importanttakeaway I want you to have from
this process from today'sdiscussion, though, is that it
any prenup or postnup can becontested later by one person.
So if they're not happy, theycan say, I don't agree that this
is valid.
And then you know it's justreally up.
Hopefully you'll won't end up incourt.

(14:54):
But if you do, it's expensive tocontest a prenup and uh or a
postnup.
And it's um a whole process thatgoes on before the divorce.
And then the outcome of thatdecision, then you start the
divorce.
So it really delays things aswell.
So I want to just give you thebest possible setup for doing
the prenup or postnup is if thecouple hires a mediation lawyer

(15:18):
like myself, so I mediate whereI'm working as an impartial
between both sides to a divorce.
I mean, sorry, to a prenup.
And so I'm we're allcollaborating together, coming
up with the terms together,meeting together, expressing our
concerns together, our hopes,our wishes, our desires.
And then once I draft the thedocument, then they get two

(15:41):
other attorneys to review it andmake sure that they understand
it, to advocate for any changes.
And so I've never seen asituation where someone can
contest uh the validity of thatdocument under that scenario.
So if you're looking forcertainty, that's a really,
really, really powerful way ofgoing about um, you know,

(16:02):
setting up a prenup to uh orpostnup to be valid.
Um, so for real estate, um thereare a lot of ways that houses a
house owned before marriage canbecome not only separate
property.
So if you owned it beforemarriage, it's separate
property.
However, what happens if youmake a payment on the mortgage

(16:27):
with money that is earned duringmarriage?
Money earned during marriage iscommunity money.
If you take that money and paythe mortgage with your separate
pro to your separate property,you're creating part separate
property, part community, andthe community is equally owned.
What happens if you retitle theproperty during marriage?

(16:50):
You put your spouse on title.
Well, that's a problem if you'rehoping to have it be uh remain
separate.
What happens if you refinancethe mortgage and then he or she
is uh on the mortgage, so it's ajoint mortgage at that point?
That creates a lot ofuncertainty.

(17:10):
What if you even what if youre-refinance but you don't put
them on the mortgage?
However, they could claim duringdivorce that your that that the
marital uh assets and incomeswere used to qualify for that
for that refinancing.
So even if they're not on therefinancing, if your income plus

(17:33):
their income was used to qualifyum and other things like that,
then they can claim that thathas an impact on whether it's a
spot a separate property uh anylonger.
So um figuring out what isseparate uh and what's community
and how to divide the realestate are all really central to

(17:55):
a divorce process.
And that's why doing it inadvance in a prenup uh can
really, really be beneficial.
Uh, the other factor with thehouse is that it's not a 401k,
right?
It's not an emotionless asset.
Uh a house is a home, it's whereyou raised your kids or raising

(18:15):
your kids, it's where you live,it's where you spend the most
time.
And and giving that up ordividing it is extremely
personal and emotional.
So it's not just a uh afinancial decision when people
negotiate how to divide theirhome during a divorce.
It's it there's a lot of emotionbehind it.

(18:36):
Um, and emotion can createconflict depending on the
scenario.
So um it it can be it can getdicey uh around the home.
Um let me give you a scenario umreal quick about the home.
Let's say um that uh Charlie andum let's say that Charlie and

(19:01):
Carol uh um are gonna buy a homeand they're married.
So Charlie calls his dad andsays, Hey, can you transfer, uh
can you give me, gift me somemoney and put it so I can buy,
so I can use it for the downpayment.
So let's say Charlie's dadtransfers$300,000 to Charlie's
account.
And then Carol calls mom and sheand asks for the same.

(19:26):
Carol's mom transfers from heraccount directly to the escrow
of the for the real estatepurchase.
And then so Charlie, on theother hand, the money came from
his dad into his account.
And then over the course of youknow, uh time, over the course
of days, weeks, between thattime and when the purchase was

(19:47):
final, he transferred moneyperiodically from his separate
account to the joint to a jointaccount.
And then eventually from thatjoint account is where he sent
where they sent$200,000,$300,000for his portion of the down
payment.
So if they divorce later,because Charlie's money was

(20:11):
mixed into a joint account withother money, that's a reason
that he will not see that money,he would not be reimbursed those
funds.
Whereas Carol Carol's gonna bereimbursed, the$300,000 that her
mom gave her because it camedirectly from her account from

(20:31):
mom's account into escrow.
It didn't get mixed in, didn'tget commingled.
The other issue will be um, canCharlie prove I mean, can
Charlie prove that that thefunds that his dad gave were
were a gift to just him?
If they were a gift to thecouple, then they won't be
reimbursed either.

(20:53):
So he has to prove both that hisdad just gave him a gift alone,
and that um and that the fundswere not commingled, which he
won't be able to do.
So at the end of the divorce,she will get the 300k back, his
300k very much, very likely notto come back, and then they

(21:13):
divide the remaining equity50-50 if it's community
property.
Um, so a prenup would totallyeliminate those issues.
It would say any gifts we getfrom family are gifts to us, and
we would be reimbursed thosemonies in the event of a
divorce, no matter where themoney goes, what account it goes
into, any inheritance, all ofthat would just go out the

(21:36):
window by having very simplerules about what is the
definition of prop what what isthe definition of separate
property and what will happenwith that property in the event
of divorce?
So that's a really clearindication, a really clear
example of how a prenup caneliminate a lot of uncertainty
that otherwise would happen.

SPEAKER_01 (21:54):
Um Scott, uh please uh one question came in.
Is the prenup you spoke aboutbefore unenforceable?
She signed and never saw theagreement.

SPEAKER_02 (22:07):
She saw the agreement, she never saw it
before the day that she signedit, according to her.
She never met the attorney thatwas representing her.
So I would say in that in themediation, uh, the mediation is
not done.
We just are in our second orthird meeting.
She is saying that uh she iswilling to basically credit

(22:30):
whatever they each had beforemarriage, but she doesn't agree
that all their property thatthey acquired during marriage is
separate, which is what theprenup says.
In that case, I would say thatit would not be valid.
There's a very uh there's a rulethat says that you you you you
can't have a representative, uhan attorney that's really on the

(22:51):
other person's team.
And uh the fact that she neverspoke with that person or met
that person before, the factthat that person was hired for
her, those are not good.
That doesn't look good.
I'm shocked that the attorneysactually did it, to be honest
with you.
Um, but yeah, I would say inthat case, that's a classic
example of an unenforceabledocument.

SPEAKER_01 (23:12):
Uh, one more question came in.
We both have our own assets frombefore the relationship.
Isn't that already separate inCalifornia?
Why would we still need a pinupif we trust each other?

SPEAKER_02 (23:26):
Yeah, I mean, uh the great question.
So, first of all, I love yourquestions.
Please ask them because when Iteach law school, I can see the
students glaze over as I'mtalking at them.
And I don't want, I can't seeyou, so I'm sure I don't want
you to feel glazed over.
I want you to feel like this isinteractive.
And uh, and again, uh, you know,unfortunately, people don't hire

(23:49):
me for my personality, so I'mtrying my best to be interesting
here.
But um, to your question, itthose assets are that you own
before marriage are separateproperty, but what you do with
those assets during marriage cancan change that very easily.
So, where the money goes, ifit's commingled into other

(24:10):
accounts, um if you usecommunity money to pay for those
separate assets, all of that canmake a separate asset no longer
totally separate.
And it's really easy to do.
Um, and it happens every singleday.
So the the the answer really isyes, if you trust each other,
that's awesome.

(24:31):
If you if while you trust eachother, that's a great time to
get a prenup or a postnupbecause you do trust each other,
you are hopeful, you're in ittogether, and you're just trying
to protect each other.
Okay.
Um, so uh another example, realquick, is uh like let's say Rick

(24:51):
and Rochelle, let's uh they theyeach have a million dollars in a
trust before marriage.
Okay.
Rochelle uses all milliondollars of her money during the
marriage to pay for the kids'educations, uh, you know, living
expenses, you know, medicalinsurance, uh that she might
have bought a property duringthat time, cars, art, rugs, all

(25:17):
the things that we buy, right?
Um, and uh Rick doesn't use anyof his$1 million during the
marriage.
And so at the end of the at thetime of divorce, Rick not only
has a million dollars, but hisinvestments grew to two or 2.5
or who knows what.

(25:37):
So he has all that money, andthat will be separate property
because it never mixed in, itnever left that account.
So 100% separate propertybecause it was in uh it was uh
in existence prior to marriage.
And Rochelle is very likely notto see any of that million
dollars back.

(26:00):
She has to show records aboutwhere the money went, and she
has to keep those records at thetime that that the money was
exchanged.
She can't go back from now andgo back and keep records.
It's very hard to satisfy therules for rec the record keeping
that almost nobody can do that.

(26:21):
And so basically, she spent amillion dollars of separate
property on the family, and hespent a million, he kept a
million dollars and it grew to2.5 or whatever it grew to.
And so what a disproportionateresult.
But that's what California lawwould say is going to happen to
their situation.
A prenup would say, hey, nomatter what happens, we each get

(26:46):
our million dollars off the topthat we had coming into the
marriage.
And then we figure out what elseto divide.
So um, just another quickexample of how that uh uh uh how
uh the documents that we'retalking about would really uh be
impactful.
So a house um uh uh owned beforemarriage, um oh sorry, uh you're

(27:09):
getting a divorce, let's say,and now you have to decide what
to do with the family home.
Okay, so you can do in mediationor in litigation, you can
basically do one party can buythe other out.
So one, you know, dad can buymom out, mom can buy dad out.

(27:30):
Uh you guys could sell the home,you could co-own the property.
So the most common result thatpeople in mediation are trying
to accomplish is a buyout.
So one person's trying to buythe other out.
And so, how do you account, whatare the issues that you kind of
deal with in that scenario?
It happens almost in everymediation um that I'm involved

(27:52):
in.
So to do a buyout, you have tofirst agree on the buyout
amount.
So, what's what's the amountthat's owed to to make the deal?
Um, so one way of doing that isto say, hey, the fair market
value of the property minus theloan gives us the community
value.
And then 50% of that is thebuyout.

(28:14):
So you have a$1 million house,you owe$500,000 on a loan.
So it's$500K is the communityproperty value.
50% of that is what's owed tothe person to do a buyout.
That's option one.
What about though, if so if theif the person who's going to own
the home afterwards might sellthe home in two, three, five

(28:34):
years?
What about that then they'lloccur incur all the realtor
fees, which are like six toeight percent, right?
So what about those fees?
Should those be factored in toreduce the buyout amount?
So that's another issue.
Do you factor in those costs ofsale in the future or not?
So I when someone tells me inmediation, I want to own the

(28:57):
home, I'm never gonna move, I'mgonna live there till I die.
Well, then in that case, I wouldsay it'd be unfair to the other
person to reduce the buyout bythose costs of sale because
they're saying that they'renever gonna sell.

SPEAKER_01 (29:09):
Scott, uh, I have another question for you.
Yes, sir.
Uh question says, as an estateplanning attorney, I recommend
prenuptial agreements, separatetrust for separate assets, and a
joint trust for communityassets.
What is your perspective on thisapproach?

SPEAKER_02 (29:29):
Yeah, I mean, I don't uh I think that's great.
Um I think that um, you know,the trusts will typically come
into play when there's a youknow, when someone dies.
Um and so just designating umproperty as community in a joint
trust or designating it asseparate in a separate trust

(29:52):
doesn't have the same effectthat a prenuptial agreement
would have.
Um, and it doesn't necessarilychange anything.
Absent a prenuptial agreement,it doesn't change the
characterization of property inthe event of divorce.
So if there's a trust that saysthis property is in a community
joint trust, then that doesn'tnecessarily mean it's a hundred

(30:14):
percent community property andthe same for separate property
trusts.
So to gain that certainty thatyou would get a prenuptial
agreement, which is about whatwill happen if we divorce.
Whereas a trust is really inplace to uh take take effect in
the event of the you know thedeath of a party.

(30:36):
Um so um back to the buyout.
So uh you have to figure out howto get what the buyout amount
is, and then you have todetermine how to get the money
to the person.
So, you know, um, is there gonnabe a pay plan over three, four,
five years?
Um, are you going to um transfercash up front to the person

(30:57):
being bought out?
Uh are you gonna say, hey, umtake a hundred thousand from my
401k and then I'll give you200,000 over here from in this
stock account?
Are you gonna piece it togetherthat way?
Um, so you have to make surethat both party, whoever's doing
the buying out, can actuallyperform.
Like, where's the money comingfrom?

(31:19):
And if the pay if the buyoutamount is not going, like some
of my clients will say, Hey, I Iwant to pay them, you know,
within seven years, I'll givethem the full amount.
Well, seven years a long timeout.
So, what I also say is if itstarts to get that time frame,
you know, anything close tothat, I say, Hey, maybe you guys
should co-own the home duringthat time.

(31:40):
And then the buyout would bebased on the on the fair market
value, you know, seven yearsfrom now, which is more fair to
the person being bought out.
Why lock in uh the buyout ontoday's value when you're not
getting paid seven, you know,for six, seven years?
So all these things are nuancedand they're and they're you know
unique to each case, but theseare the sort of things that you

(32:02):
have to go uh figure out.
Last issue that I want tomention when you're doing a
buyout is what happens with theloan.
So if there's a joint mortgage,uh if the person being bought
out once off the mortgage,there's really just you know two
options.
You can do a loan assumption.

(32:23):
So the person who's going to ownthe home assumes the loan and it
keeps the same terms intact, itdoesn't change the loan, just
removes the other spouse.
Uh and the and that's the idealscenarios, but you have to
qualify on your own, as if youlike you have to qualify for the
loan.

(32:43):
So the bank has to approve you.
And if you already have adivorce case that's opened, you
can't apply for a loanassumption until you either have
a signed marital settlementagreement.
So you have to have a signedsettlement, or that settlement
has to be approved by the court,which is two or three months
after the signed settlement.

(33:04):
So essentially you will beapplying for a loan assumption
after the divorce process, afteryou've submitted your agreement.
So your agreement has to talkabout what will happen if we if
the loan assumption works,awesome.
Then then it's done, right?
What happens if the loanassumption is not approved?
Then you have to say that uhthat you will refinance or

(33:28):
you'll sell at that point.
If you're refinancing, we haveto make sure that, you know, if
the loan is going to go from2.95 to 5.85, you know, we have
to make sure that the paymentscan be made.
So there's just a lot ofplanning.
So it's about what's the buyoutamount, uh, how is it getting to
the person, and what's happeningwith the loan are are really,

(33:51):
you know, very, very common,very, very uh important issues.
Uh, all of which you could setout in advance in a prenuptial
agreement or a postnuptialagreement.
You could say, this is what'sgoing to happen with the home,
or this is who I we have theright to first refusal to
purchase the home.

(34:12):
And here are the terms.
Here's how we figure out theequity.
All of that could be answered inadvance.
And the map doesn't change justbecause you don't know
necessarily where the home is orwhat what is the home doesn't
matter.
If you're setting out the rules,it's fair to create those rules
in advance as it is to have tocreate them at the time of

(34:33):
divorce.
There's no difference in mymind.
So as long as both parties arerepresented and everyone
understands what they're doing,um, that's really it's it's
really can save you tremendousheartache and give you certainty
about the uh about the familyassets going forward.
Um Daniel, did you have anotherquestion?

SPEAKER_01 (34:55):
Oh yeah, uh one more question came in.
Uh I don't know if it's the timeto ask or not, but we are not
getting divorced, but ourfinances are messy after over 10
years.
Why do couples even do prenups?
Post nups.
What are the real reasons?

SPEAKER_02 (35:16):
Yeah, uh it's usually when there's a change in
circumstances.
So you inherit property, and uhlet's say you inherit, you know,
uh a residential, you inherit auh investment property building,
you know, with 20 units, and umit if you that income is

(35:37):
separate, so you have theinvestment property is
inherited, and so the incomestemming from that separate
property is also separate.
But what happens with that moneyif you transfer it into joint
accounts, like I said before?
So there's ways to make thoseproperties not entirely
separate, and the money's notentirely separate.

(35:59):
So uh that is a very commonreason.
Someone inherits money and theywant to make sure that they they
have an agreement that says,hey, no matter what happens,
that inheritance is comes offthe top of any division of
assets that no matter if the thebuilding is sold and converted
into a van Gogh art, you know,one of one original, or it's uh

(36:22):
you know, kept and the moneyflows into the joint accounts,
or whatever happens with it,it's all coming back to the
person that inherited the money.
So inheritance and then um justa change in circumstances like a
business that really takes off,or something that the people
that the parties didn'tanticipate, you know, um uh has
occurred and it's concerning oneof them.

(36:45):
They're really worried about it,and it's making the marriage,
it's impacting the quality ofthe marriage.
And so they don't want to getdivorced, but they need this
thing resolved in order for themto really, you know, for them to
thrive and have the life thatthey're hoping for.
Um so uh in general listening,um anyways.

(37:18):
So when you're going through auh a divorce um process in
California, uh majority ofpeople choose to um hire
attorneys and go to court, andthat's just kind of the default.
Um and when you do that, beforeyou know what you've really

(37:38):
decided on, you're stuck in kindof a a limbo period, a
two-year-long divorce, even ifyour spouse and you think that
it's not that complicated,you're kind of on the timeline
of the court and the lawyers andand and everything is kind of
out of your control.
Um, a prenup, a huge benefit ofprenup is that you would

(37:59):
basically dictate what wouldhappen, how that process would
go in the event of divorce.
So um uh what will happen, howdo we we agree that we will um
mediate a divorce?
What mediation is, is that youeach hire the same mediator, and
then that person can um guideyou through a settlement.

(38:21):
Uh and you don't have to go tocourt.
Um, you can have uh uh attorneyson the sign, but you don't have
to.
And it uh lasts, you know, two,three, four months instead of
two or three years.
And it's a lot less expensiveand it's better for your kids
because there's there's lessfighting.
Um, so another big benefit of aprenup is just getting how the

(38:42):
divorce process uh would work inthe end.
So we talked about some realestate issues, and inheritance
is another huge part of of uh ofdivorce and and and prenup.
So um our clients want to knowwith certainty that their

(39:02):
inherited funds are going toremain their separate property.
That's a big reason why peopleget marital agreements.
However, it goes beyond that.
Uh uh grandparents and parentswant to feel certainty that they
can give to their kids andgrandkids and that that money

(39:22):
won't be lost in the event of adivorce.
So it's not just giving thecouple certainty about what
would happen to their inheritedfunds, it's giving their family
members the ability to safeguardtheir inheritance their the
funds that they designate asinheritance funds for their

(39:42):
family, and that it staysseparate in the event that that
relationship um doesn't work outin the end.
Um, and so inheritance funds,just like any other assets, they
come in as separate.
But how how can we how do wethink that inheritance funds can

(40:03):
change from separate to notseparate?
Well, just like anything else,you take those funds and you mix
them in with other money, or youbreak, or you have those those
uh the properties that youinherited and you pay the
mortgages for those propertieswith your income during
marriage.
So all of a sudden you'veconverted your property from not

(40:26):
a hundred percent separ from ahundred percent separate to
something different.
Um, and it's so easy, you haveno idea the rules again.
The rules are on the person,require the person that claims
the property is separate toprove it.
And to prove it, you have tohave records, records going back

(40:50):
to the time that the thetransactions took place.
When you made a payment to amortgage that's on a separate
property, where did that moneycome from?
If you can't show that it camefrom a separate account or it
came from a you if you don'thave that evidence, then you're
not gonna get credited with thatseparate property.
So it can happen so easilybecause people don't think that

(41:14):
they're gonna end up in divorce,you know, 12, 15 years before
when they're making theseoriginal decisions.

SPEAKER_01 (41:21):
Another question came in.
Are my retirement accounts stillmine if I open them before the
marriage?
Or does my wife get part of it?

SPEAKER_02 (41:33):
Um, yes.
So the law says that what youhad during what you had at the
time of marriage, uh, so let'ssay you had a 400-400,000 in a
in a 401k but at the time ofmarriage, so that's separate
property.
Uh, and then what that$400,000grows into during the marriage

(41:55):
is also separate property.
The remaining balance of theaccount would be community.
So what you contributed to itduring marriage and the growth
in that value is community.
So um that's how you woulddifferentiate.
So the answer is it's bothseparate and community, most
likely.
Now, if you had a Roth IRA thatwith a hundred grand in it at

(42:18):
the date of marriage, and younever added one cent to it
during marriage, it's a hundredpercent separate.
But most people createadditional retirement and and
and fund additional retirementsduring marriage.
And what a prenup would say ishey, it doesn't matter what
happens with that account, wherethe money comes from, if if I

(42:41):
have if that that 401k, uh myyou know, your 401k is entirely
yours no matter what, my 401k isentirely mine.
Um, so you eliminate theuncertainty, you eliminate the
need to um keep records and doand and and do uh divorce math
at the time of uh separation.

(43:04):
Uh or you could say that thatany assets acquired, you know,
any retirement that's acquiredduring marriage is community
property.
I mean, you don't have to keepeverything separate.
So it's you negotiate thesethings in the prenup, uh but
whatever you negotiate, whateveryou agree to, simplifies a
divorce because it's alreadybeen figured out for you.

(43:25):
Did you have any otherquestions, Daniel?

SPEAKER_01 (43:28):
Uh a few came in, but uh you already answered
them.
Okay.
One of them was uh uh what ifone of us built most of the
wealth during the marriage?
Is it automatically 50-50 nomatter what?

SPEAKER_02 (43:44):
Well, that's a good one.
I can use uh, I mean, that'sthat um I have a case right now
where someone works at a veryhigh-powered job.
Uh, they're mediating because Idon't litigate cases, I choose
not to anymore.
Um, and so in this case, it'spretty unique.
The person's is asking, he he'semployed as kind of a

(44:05):
high-powered situation, andthey've earned a lot of money
during the marriage, which isall community money, but they're
negotiating a settlement whichbasically would award him a
little bit more than 50% becauseit's his his claim is that his
talents generated that money.
And um, even though that's notwhat the law says, the law says

(44:28):
it's 50-50, it doesn't matterwhere the money came from.
In this case, they'renegotiating something to kind of
assign him additional uh funds,um, probably something around
like you know, 57, 43, if I hadto guess.
So it's not settled yet.
But um, so my job as a mediatoris to say, hey, um, you know,

(44:50):
that doesn't matter.
Wherever the money came from, itwas acquired during marriage,
it's community property.
But in mediation, you can makeyour own rules, and if you're
willing to agree to things, thenyou can negotiate those things.

SPEAKER_01 (45:06):
I have another question.
This one is personal.
Uh, could you discuss theimportance of having a certified
divorce financial analyst on theteam?

SPEAKER_02 (45:18):
Yes, yes, absolutely.
So um I'll call it a CDFA on auh uh at the time of divorce.
A CDFA is a person that willevaluate financial settlements
from from different perspectivesand help you understand that you

(45:38):
know the total dollar figurethat you're even if the total
dollars that each person'sgetting is equal, the impact of
those dollars can be different.
So a 401k money is not the sameas cash in your Bank of America
account.
Roth IRA money is not the sameas 401k because it's post-tax,

(46:00):
it won't be taxed additionally.
Um, so evaluating uh not justmaking sure that you're getting
the right uh dollar figure orvalue, but how those how the
division that's being proposedwill affect you in year one, in
year three, in year seven,projecting down the road how

(46:24):
things, the division will affecteach party and showing you, you
know, here's your projected networth over this period of time,
here's the projected net worthof the other side based on these
assets.
And that's just one example, butalso a huge issue, Danielle, I'm
sure, uh, that you deal with allthe time is like, you know,
people, uh, especially moms, um,want to keep the house for the

(46:48):
kids.
Um, but they're oftentimes arewith uh giving up every possible
asset, all the cash, all theretirement, uh, the pension to
make it happen.
And it's a very scary decisionbecause the house is a has a lot
of liabilities built into it.
Um and yes, California realestate has gone up over time,

(47:08):
but um, you know, a CDFA isgonna help you decide is is this
a smart move?
Is this a is this a disastermove if you do this?
Are you asking for trouble?
Um, so just giving certainty, uhtaking the guesswork out of your
settlement discussions.
And a mediator can do some ofthat, but not really.

(47:29):
I mean, we spend most of ourtime really um, you know,
delving in on what thesettlement terms are, and I'm
trying to make them equitable,but the division of different
assets, and it's really, youknow, those things are better
discussed with your own CDFA,and and you come in with your
own proposal based on thosediscussions.

(47:51):
What do you think the thebiggest impact of a CDFA is,
Daniel?

SPEAKER_01 (47:54):
Well, the CDFA knows the tax laws, knows the uh
financial planning aspects, theincome planning portion of it,
and uh basically anything thathas to do with the wealth
management and uh incomeproduce, uh producing of income,

(48:15):
uh budgeting, uh cash flow, anduh all of them together.
As you said, someone may justget the house, and we have seen
it.
Both you and I we have seen it.
The the uh the wife gets thehouse with four kids, and uh
there is really no cash flow.
So what are you gonna do now?

SPEAKER_02 (48:37):
So dangerous, yeah, it's scary.
And and a lot of people don'trealize how expensive they are,
right?
Like, you know, the this goesout, uh, the a leak here, you
know, the property insuranceinsurance is out of control in
California.
So it's just a very it can bevery expensive.
I'm I'm I always make my clientsin mediation get a CDFA if

(49:00):
they're making a decision that Iview as very risky.
Um just to consult with one evenfor two hours, just because I
want to make sure that they knowwhat's again, CDFA specializes
in not just what's gonna happenon month one, but how does this
look down the road?
Because right, like divorceisn't about year one
necessarily, it's about down theroad.

(49:22):
How does this look?
Um, also great use of CDFA isuh, you know, um when people try
to get creative for spousalsupport, like doing a spousal
support buyout.
So instead of paying spousalsupport or receiving spousal
support monthly for you know 12or 13 or 15 years or however
long, um, you know, you wouldget an agreed upon buyout amount

(49:48):
up front and no more, no, nomore, no spousal support beyond
that forever.
And so is that a good deal?
Well, it depends on someoneneeds to help you understand
what's the investment benefit tohaving that money up front.
What will that money turn intoif invested wisely?
With Daniel certainly is anexpert on.

SPEAKER_01 (50:10):
I have from I I I saw a case.
Uh the the wife got three and ahalf million up front.
Uh the first thing she did, shebought a condo somewhere here in
LA, um around 1.8 or 2 million,and then she took a couple of uh

(50:33):
first class exotic internationaltrips.
So after about two and a halfyears, less than that, she was
out of money.
I mean, literally, now and therewas she came to me, there was
nothing I could do.
So you have to have thediscipline and you have to have

(50:54):
someone who would help you andcoach you what to do with the
money.

SPEAKER_02 (51:01):
And a lot of people never haven't made those
financial decisions with thatsort of money before.

SPEAKER_01 (51:07):
Another one was uh uh another one, one of the
spouses got the uh money fromthe 401k of the of the other
spouse, and she took everythingout, paid, did not pay the tax
on that, and now the IRC isafter her.
Or after yeah.

SPEAKER_02 (51:27):
During the divorce process, just so everyone knows,
when you take you can actually,if you're trying to take money
from a 401k and put it in yourbank account, you can avoid it's
a there's a one-time freedomavoiding the 10% like uh penalty
that you get charged for justwith an IRA or or a 401k.
But when you just when you takethe money out and you cash it

(51:49):
out, I always suggest, and Idon't know if in this case I
would have told that person,they should let the the taxes be
taken out at the time oftransfer.
So they don't they yes, they'llthey'll reduce the amount that
they're getting because thetaxes are pre-reserved, but like
then you don't have to worryabout what's coming.

SPEAKER_01 (52:09):
Yes.
So those those are the littlethings that a lot of people are
not aware.
Yeah, so that's that's the roleof the C uh the CDFA to make
sure.
Uh, for example, if someoneneeds money right after the
divorce, and if the 401k goesinto a if the 401k on quadro

(52:30):
before goes to an IRA, they cantake the money out as much as
they need and just pay pay thetax.
But if it's rolled over into anIRA and then they want to take
it out in a other two weeks, andif they're under age 59 and uh
59 and one half, then there is a10% tax penalty.
A little thing that a lot ofunfortunately uh tax

(52:53):
professionals are not aware of.

SPEAKER_02 (52:55):
Yeah, I have a great one.
I mean, um with for people thatare doing uh like a spousal
support, you know, buyout, likeI said before, just getting an
upfront payment.
Sometimes it will come like thethe payer will say, Hey, or or
even doing a house buyout.
It doesn't matter.
Like uh they could say, Hey, Iowe you$300,000 for the house,

(53:16):
but um I want$200,000 to comefrom my 401k.
So they want to say, transfer$200K from my 401k to your IRA
and then count that as$200,000towards the buyout, and then
I'll give you$100,000 in cash.
Um, so that they're getting thethe the same dollar amount to

(53:37):
the person, but they're givingtwo-thirds of it as 401k
retirement money.
So the question is when thatperson says, okay, I'll do that,
but I'm gonna cash out the 401ktransfer into cash, and so I'm
gonna put that in my bankaccount.
They're not ending up with200,000, right?
Because they're paying thetaxes.
So a CDFA, I love when a CDFAgets involved in a case like

(54:01):
that because they'll tell theirclient, who's my client, hey, it
you should be get they shouldoverfund that 401k transfer.
It should be 231, not 200,because 231 will get you to 200.
And that's really the numberthat you're supposed to get.
You're not supposed to get 200that turns into 160.

(54:22):
And so that's that's uh really,really powerful, just a little
example of how you know theywork in uh mediation.

SPEAKER_01 (54:29):
Well, another question came in.
We in our we are in our 50s.
Is divorce way more financiallydangerous at this age?

SPEAKER_02 (54:39):
Well, people live longer these days, right?
So, I mean, I uh it that'scalled silver divorce, divorce
when you're in your 50s orbeyond, and they're it's the
biggest growing segment ofdivorce, just so you're aware.
Um, and I think that goes intothe the former biggest growing
was you know under 30, but kidsare getting married later.

(55:02):
So um, so the biggest growingsegment of divorce is silver
divorce.
And the issues are, you know,there it's there, it's not like
military divorce where therereally are unique, totally
unique issues to the to thatgroup that don't exist with
others.
But in silver divorce, it's it'sa lot there's a higher chance

(55:22):
that that there's no there's noincome being earned from
employment.
So if you're retired, thenspousal support will really be
about you know um figuring outwhat your investment income is
and your social security andbasing the support on on those
numbers.
So there's uh typically lessmoney for spousal support than

(55:46):
there would be.
Um, however, people that havebeen married a long time say, do
the internet says I should begetting support for life, even
though they're retired, theyshould take care of me.
But if there's not the incomebeing earned, it's really
dividing the assets equally andjust basing support on the
difference between his and hersocial security and investment

(56:11):
income.
If they're dividing assetsequally, they should be both
getting the same investmentincome.
So support is a lot people arethe the lower earnings,
traditionally lower earningperson is often very surprised
at what the support is uhcompared to what it would have
been 10 years earlier.
Uh, and then it's a lot aboutdividing retirement assets.

(56:32):
That's a huge part of uh ofsilver divorce because that's
the majority of the assets.
Um and those are really nodifferent than a traditional
situation.

SPEAKER_01 (56:42):
Uh, one other question came in.
I think we are running out oftime.
Uh one spouse can transfer moneyfrom their SEP IRA to other
spouse CEP IRA if I agree duringa divorce.
Is there any tax penalty forthis?

SPEAKER_02 (56:56):
No, you can divide an IRA to another to another
person's IRA uh without all youneed is a court order.
So you don't even need what'scalled a quadro, qdro.
A quadro is how you divide a401k to another to your former
spouse's IRA.
That is a special document thatallows that transfer to be

(57:19):
tax-free and penalty-free.
QDRO quadro, and you need aquadro attorney to prepare that
document.
Um uh, but an IRA transfer justrequires a judgment.
So you need a divorce judgment,you need a settlement agreement
signed by each of you, thensubmitted to the judge.
The judge approves it.

(57:40):
You have a judgment, and youtake that judgment to Schwab or
Vanguard or wherever and say,Look, it says here that you're
supposed to transfer it and thenthey they they perform it for
you, but you'll need thejudgment, they won't do it
without that.

SPEAKER_01 (57:54):
I did one of those, not the quadro, but the uh IRA
to step IRA to IRA.
Uh, both husband and wife, theyhad money in their own IRAs.
So, what we did is instead ofsitting down and calculating, we
gave half of the wife to thehusband and half of the husband
to the wife.
We we created two new accounts,so everything will be very

(58:16):
clear.
No, you know, yeah.

SPEAKER_02 (58:19):
So and it's not because if it's a traditional
IRA, there's tax liabilitiesbuilt into that, and and they
they could be different, youknow.
The accounts have one accountcould have 400 grand in tax
liabilities, the other couldhave 50,000.
Who knows?
So, like dividing them equallyis the is the fair way to do it.

(58:40):
But great.

SPEAKER_01 (58:42):
We are at the top of the hour.
We are at the top of the hour.
Well, uh, thank you so much,everyone, for joining us.
Uh, we will uh if you have anyquestion, please feel free to
email us.
We will uh follow up with anemail.
Uh as far as the uh survey.

(59:02):
And also, if you have anyquestion with that email, you
can uh if you have anyquestions, uh you're free.
You're more than welcome andfree to contact us.
Have a wonderful evening uh andenjoy this beautiful uh early uh
Thanksgiving week and theholiday season.
Take care.

(59:24):
Thank you, Scott.
Bye bye.