In this episode, Paula speaks with Rachael Burns from True Wealth about dealing with the challenges of divorce and the loss of a spouse. Rachael, who specializes in helping women through life transitions, explains how she found her niche after working with large financial firms like Merrill Lynch and Morgan Stanley.
Rachael's expertise lies in supporting women who have faced significant life changes, such as the death of a spouse or divorce. She emphasizes the importance of empowering women to take control of their finances, especially in situations where they may not have been financially empowered before.
They discuss the critical role of knowledge in these situations, advising listeners to gather as much information about their finances as possible, even before contemplating divorce. Rachael explains that knowing your financial situation can help alleviate the fear of the unknown and make informed decisions during challenging times.
They address the emotional aspect of these transitions and the difficulties of making rational decisions while dealing with grief. Rachael offers practical advice, suggesting that individuals focus on urgent matters, seek professional help, and consider therapy to manage the emotional aspects separately from financial decisions.
One key point is avoiding common mistakes, such as taking advice from biased sources or making impulsive financial decisions during moments of vulnerability. Rachael shares examples of widowed individuals spending large sums of money without considering long-term financial sustainability.
The podcast emphasizes the importance of being aware of your financial situation regardless of marital status, and Rachael stresses the significance of planning for unexpected life events. They encourage listeners to reach out to financial professionals for guidance and highlight the positive impact of proactive financial planning.
In closing, Paula and Rachael emphasize that life can be unpredictable, and while difficult circumstances may arise, being financially prepared can help mitigate the impact and secure a more stable future.
Find Rachael at https://trueworthfp.com/
Find Paula Christine at PaulaChristine.com or via emal at paula@paulachristine.com.
0:00:06 - (Paula): Hi, and welcome to beyond the Paycheck. I'm Paula Christine. I know when I went through a divorce oh, God, a few years ago, I had to kind of figure out my whole life over again and figure out my finances. In being a financial professional, it was probably pretty easy for me, but I know it can be difficult for others. So I've asked Rachael Burns from True Wealth today to talk to us about not only a divorce, but also after a spouse passes away. So welcome, Rachael.
0:00:31 - (Rachael): Thank you so much for having me, Paula.
0:00:35 - (Paula): So what made you decide to specialize in divorce and widows?
0:00:37 - (Rachael): So I have been in the industry for probably 15 years, and by the industry, I mean I worked for the big financial firms like Merrill Lynch, Morgan Stanley. And when you're with the big firms, you don't really specialize in any specific area. It's just kind of you specialize in people that have a lot of money, and that's about it. But what I found is that I really enjoyed working with women who had gone through some sort of life transition, whether that was their spouse passed away or they got divorced or someone else in their family passed away.
0:01:11 - (Rachael): And I really enjoyed helping them take over their own finances when maybe they hadn't had to do that before. And so I just enjoyed those clients when they came along, but it certainly wasn't all I did. And then when I had the opportunity to go out on my own, when COVID hit and I decided to make a change, I thought, I can just work with the people that I want to work with. And I decided to only work with those women.
0:01:41 - (Rachael): And so since then, that's all I've been doing, which has been wonderful.
0:01:46 - (Paula): It's a great niche to work with. They're so in need, especially women, because for lots of reasons. We don't make as much sometimes as men. And sometimes we get hit hard in a divorce situation because we may not be the breadwinners.
0:02:00 - (Rachael): Exactly. And a lot of times the woman is not in a position of power financially, and they don't feel like they're in a position of power even when they're no longer in that relationship. So that's my favorite type of situation to fix, is to help them feel empowered.
0:02:16 - (Paula): Especially in a time when they're in that transition and the emotions are going crazy.
0:02:21 - (Rachael): Yeah, absolutely.
0:02:22 - (Paula): You're afraid of what's going to happen next, and you've got to make decisions, and people put in input that shouldn't. And you really need to find a professional to work with.
0:02:33 - (Rachael): Yeah.
0:02:33 - (Paula): So what's the first advice you give someone who's maybe contemplating a divorce?
0:02:37 - (Rachael): I think knowledge is power, and the more information that you can gather as early in the process as possible is going to help you feel more confident. A lot of times I see women who want to get divorced, but they have no idea what their financial situation would look like, and it keeps them from taking any action because they're scared of that. But if you can gather information, gather documents that you have access to, the more information that you have about your current finances, you're going to have a better understanding of how things are going to look when you get on the other side.
0:03:17 - (Rachael): And that helps them make good decisions during the divorce, and it just helps them not be so scared about the unknown that awaits them. I mean, ideally, if it's even before anyone's filed, if it's just in the contemplation phase, that's kind of the perfect time where you can get access to documents sometimes that maybe you wouldn't be able to access once your spouse knows that you're intending to separate.
0:03:43 - (Rachael): Because sometimes once that's out in the open, things kind of disappear or people are a little less forthcoming with information.
0:03:52 - (Paula): Yeah. Everything goes on lockdown.
0:03:54 - (Rachael): Absolutely. So the earlier the better that you can start gathering this information. But it's never too late. Even if you've been blindsided by divorce, now is the right time to start gathering information and understanding where you stand financially.
0:04:11 - (Paula): So even if you're not thinking about getting a divorce, it's still important to know your finances.
0:04:17 - (Rachael): Yeah. Everyone would benefit from having an increased awareness of their finances. I really believe that the worst thing that can happen is losing a spouse.
0:04:24 - (Paula): And there's a lot of things that change that most people don't even think about, like tax brackets and loss of income. There's no way to plan for that because you don't know when that's going to happen. So what would you say to women when you're I guess it still goes back to the same thing. I'm answering my own question about just knowing your finances at all times.
0:04:44 - (Rachael): Yeah. And what I would say in that situation is if you're happily married, even if you're 30 years old, and you think the chances of someone dying is really, really low, it's never zero. And so I think everyone would benefit from being involved in the family finances, even if that's not your responsibility. Technically, it's really common in relationships where one person will be in charge of managing the finances, so the other person is like, oh, well, I don't need to know what's going on. I don't really care. I just kind of use my debit card and hope for the best.
0:05:19 - (Rachael): But even if you don't need to manage that sort of thing, you need to stay in touch enough to kind of know the gist of where your money is, what's coming in and what's going out, and what kind of assets that you have, because something could happen anytime, unfortunately. And you could all of a sudden be in charge of managing all that stuff. And maybe your spouse, if they died suddenly, they're not going to be able to tell you, okay, here's a list of where all of our stuff is, and here's all of my logins.
0:05:51 - (Rachael): If you don't have that information gathered before something happens, it can be a really big mess. And it's really hard for people to kind of make sense of all that stuff, and they have bills that need to be paid, and there's some really urgent things that need to be taken care of. And I've seen some kind of tragic situations because people will get locked out of accounts when someone dies and they don't have access to cash.
0:06:18 - (Rachael): I mean, it's really a problem that I see, and so that can be avoided. Not that I'm saying everyone needs to worry about worst case scenario constantly, but at a minimum, you need to have a conversation with your spouse about where things are held. This is where we keep all the important details. Have a binder or a shared file, an online file or something where you keep all that information, because that could be a lifesaver at some point.
0:06:47 - (Paula): Actually, on my website, there's a personal record book that people can download and fill out that you can list all that information on there. And another key thing is knowing passwords.
0:06:57 - (Rachael): Yes. I mean, it's hard enough to keep track of your own passwords, but trying to get into someone else's account, I mean, it's hard to manage all that.
0:07:06 - (Paula): And then you got to change them every 90 days. It gets crazy trying to keep track of that.
0:07:10 - (Jon): My favorite thing is when you go in and they say, forgot password. And it's like, okay, change password. Can't use previous password. That's what I thought it was! You end up in an endless loop forever and ever and ever.
0:07:20 - (Paula): Thanks, Jon.
0:07:21 - (Jon): My contribution for the day.
0:07:22 - (Rachael): I know.
0:07:23 - (Paula): So let's get back on track. So emotions are the key, I know, through divorce and through losing a spouse. How do you counsel people to get a, I hate to say this word, but get a grip and so that you can make decisions when you really don't want to make any.
0:07:36 - (Rachael): Yeah. First of all, it's perfectly normal to have very strong emotions during these life transitions because they're traumatizing. I mean, even in divorce, even if they initiated it, there's still grief involved, and it's just a super emotional process. And when you're grieving, when you're experiencing some sort of traumatic event, your brain does not work as well. And so it's really unfortunate that you're expected to take care of all these administrative tasks and make all these really important decisions that impact your future at a time when you're kind of at your worst.
0:08:15 - (Rachael): And so it is hard. It's really hard to manage your emotions and to prevent your emotions from kind of tainting your decision making. But what I encourage people to do is don't look at every single thing that has to be done all at once. Anything that can be put off until later, do that. Give yourself a break. Try to focus on only the most urgent items that need to be taken care of. Make a list of the other stuff so that you don't forget, but try not to worry about the other stuff for now. So for the urgent items, if you feel like, you know what, I'm just too upset right now, or I feel like I'm not thinking clearly, get help with those things.
0:08:58 - (Rachael): And maybe you have loved ones that can help you with certain things. But maybe you need a professional to step in. Because a professional is not emotionally invested in your life, which is a good thing. And they can give you unbiased, logical advice. But you need to do whatever you need to do to calm down enough to focus on the task at hand. And I really am a big proponent of going to therapy. When I work with people who are making decisions, they're making emotional decisions with money.
0:09:33 - (Rachael): I really encourage them. Get some help with the emotional side. Yeah, it's kind of intertwined, but try to address the emotional side separately and try to kind of remove that from the financial decision making because it's really normal that this happens. But you do need to just be really careful because these decisions that you're making can impact you for a very long time.
0:09:55 - (Paula): Oh, it's easy to make mistakes. Okay, so besides emotions, what common mistakes do people make?
0:10:01 - (Rachael): I see all sorts of mistakes, but one mistake that I see is taking advice from the wrong people. And this seems to happen most often with divorce, where all of your friends and family want to chime in about your situation. And they are doing that because they care about you and they love you and they want to help. But what happens is they are giving you advice based on what's happened to them or to someone else who probably has a very different situation.
0:10:35 - (Rachael): And also your loved ones are going to be giving you advice that is very, very biased because they love you and they're going to take your side and they're probably not going to challenge you. It's not an unbiased source of advice. And so I've seen people get themselves into trouble because they're like, oh, well, my neighbor told me that I need to ask for this much alimony, or I need to ask for this schedule with the child custody or something. But everyone's situation is so different and you really need to consult with an expert if you need advice. It really needs to come from an expert who has seen all sorts of situations and is not going to be biased.
0:11:20 - (Paula): Yeah, I agree with that 100%, because even through my divorce, people would say, do this, do that, and I'd be like, I actually have an idea what I'm talking about and that's not correct.
0:11:30 - (Rachael): Yeah, everyone has something to chime in about.
0:11:33 - (Paula): Yeah, I see a lot of bad advice going to spouses after someone passes away because I think lots of times people start to think about getting involved and maybe not for the right reasons.
0:11:47 - (Rachael): Yes, unfortunately I see quite a bit of that. Especially when you have someone who's newly widowed who's not familiar with their finances and sometimes they haven't really seen what they have before and then once they see it they're like oh my gosh, I have so much money. Like I had way more money than I thought I did. And then they go crazy after their spouse is gone. They don't have an understanding of what kind of lifestyle is sustainable based on what they have in terms of assets and income and so they can get themselves into major, major trouble.
0:12:25 - (Paula): I worked with a woman who spouse died and his life insurance policy was a million dollars and within three years she had spent $600,000 of that.
0:12:34 - (Rachael): That happens so much more frequently than people realize.
0:12:38 - (Paula): I think giving people money, the casino, anything she could find to fill that void in her heart, she used the money to do that.
0:12:50 - (Rachael): Yeah, I have very similar situations where I have had a client where she had been responsible for just the money that she made. So she made a very small income from her part time work and her husband managed the rest. So she kind of just had a little bit of pocket money that she was in charge of but that was it. And when he passed away, I mean she would blow through a couple hundred thousand dollars a year just on Amazon. And giving people money, it can be really tragic.
0:13:19 - (Rachael): And their family members are more than happy to receive these gifts and they think oh, Mom's loaded. But I'm like, okay maybe they have a million dollars but if you have to live for 30 more years and you're not going to work anymore then that's not an unlimited amount of money. People just don't understand and they can have the best of intentions. Everyone might have the best of intentions but it can be really damaging when they start giving family members money. I see that a lot. That's such a unique and vulnerable situation to be in and maybe someone's not intentionally taking advantage of them, but they are taking advantage of them and it's causing severe financial harm.
0:14:06 - (Rachael): Maybe it's not happening super fast but it's on that track. And I even had to fire a client unfortunately because I kept saying, look what you're doing is completely unsustainable. I appreciate the thought behind you giving money and you wanting to spend money on these certain things but this is going to lead to really tragic outcomes for you and there is nothing I can do to stop it and I can't force anyone to do anything.
0:14:38 - (Rachael): And I've had situations where I've actually had to report things to law enforcement because someone really was taking advantage of someone. They were elderly and this was not that long ago, and I was extremely disappointed in how that went because I thought that the evidence I provided was so incredibly clear, but they just didn't really know what to do with it, and it was bad.
0:15:04 - (Paula): It's really sad. I think you see a lot of you don't see that in divorce, but you do see that a lot. When someone becomes widowed, both male and female, people try to or attempt to take not everybody, but attempt to take advantage of them as they're grieving.
0:15:18 - (Rachael): Yeah. It's really heartbreaking.
0:15:20 - (Paula): So if a woman would like to talk to you further, how would they get a hold of you?
0:15:24 - (Rachael): So, if you visit my website trueworthfp.com at the top right, I have a book of free strategy session button.
0:15:32 - (Paula): Oh, nice.
0:15:33 - (Rachael): And I encourage people to take me up on that. I would love to hear about your situation and chime in with my thoughts. Even if it's not a good fit to work together, I will still send people away with a couple of recommendations or tips or resources or something. So that's a great place to start.
0:15:53 - (Paula): Thank you, Rachael. This is not an easy conversation when you're sad and dealing with emotions, but it is something that needs to be talked about. And being aware of your finances in the beginning or all along will help you deal with death, divorce, or even a yeah. Make better decisions.
0:16:13 - (Rachael): Absolutely. I mean, one thing you can count on is life not going according to plan. You can count on that happening.
0:16:20 - (Paula): Wait a minute, Rachael. Life isn't perfect?
0:16:22 - (Rachael): I know. It's crazy. Darn. I feel like I'm such a bummer. Like, no one's going to want to invite me to parties because all I talk about is divorce and death. But this stuff happens. I mean, stuff happens to all of us. It happens to me. It happens to everyone.
0:16:38 - (Paula): Nobody is immune.
0:16:39 - (Rachael): Right. And I still have a pretty sunny attitude despite the subject matter. But this is stuff that yeah, these bad things happen. But we can prevent things from being extra terrible if we do some pretty minor planning tactics beforehand.
0:16:58 - (Paula): Yeah. I think everybody should reach out to a financial planner and sit and have a conversation.
0:17:04 - (Rachael): I think so, too, but I'm biased.
0:17:06 - (Paula): Well, I'm biased, too, but I really do think everybody should reach out to a financial planner.
0:17:11 - (Rachael): Yeah, I agree.
0:17:12 - (Paula): Not then you have to work with them, but at least sit down and talk with them to make sure that your house is in order.
0:17:17 - (Rachael): Absolutely.
0:17:18 - (Paula): Well, it's been a pleasure talking with you. So if anybody would like to get a hold of me, you can reach me at paulachristine.com or you can email me at paula@paulachristine.com. Thanks so much, Rachael.
0:17:29 - (Rachael): Thank you so much. Paula.