Are you entitled to the “career assets” you helped him build?
Mary sacrificed so that her husband Saul could have a successful career. His career wouldn’t have been possible without Mary. Now that they are going through a divorce, Mary wants to know what she is entitled to. Because it is not cut and dry, she asks, “What about the company car, the company pension, and his salary? All those things wouldn’t be possible without me.”
Mary, my client, told me about how she worked as an office admin to pay the bills while he was going to school. He was in college for 8 years, while she paid the bills, and bore the financial responsibility of their family. It was critical that Mary could do this for Saul and their daughters, in order for Saul to go to school and invest in his future career.
After Saul graduated, she quit her job and stayed home to raise the kids while her husband spent 2 years doing Graduate work. That hard work and investment enabled Saul to land a great job as a physicist. He makes $250,000/year and receives a myriad of benefits from his company. His company supplies him a pension, a fancy car, fuel for the car, a cell phone, and cell phone plan, health insurance, term life insurance, gym membership, season tickets to the college football games, and 5 weeks of paid vacation. “But what about me,” Mary wondered? “Do I lose all those benefits when the marriage is over? I worked hard to make all that happen for us. And now I lose it all?”
What Mary is wondering about was career assets. They are benefits that an employee receives because of their position in the company. They include continuing education, training, licenses, health insurance, disability insurance, life insurance, unemployment benefits, paid sick leave, vacation pay, retirement benefits, pension plans, stock options, job experience, seniority in the company, professional contacts, dues for membership in clubs, season tickets, and more.
If Saul didn’t have that particular position in his company, he wouldn’t have had all those career assets. And if Mary hadn’t supported him going back to school for 8 years, Saul wouldn’t have that position.
As a divorce financial analyst, I advised Mary to include all of Saul’s career assets in the divorce negotiations.
Why be so nitpicky? Mary and Saul focused on paying off student loan debt, rather than amassing money in savings or assets. They reached the point where they had successfully paid off his student loans and other debt, but they did not yet have much money in savings. So, when looking at how to divide up the assets for divorce, it looked bleak for Mary. Here they were at the point where they lived in a $500,000 house (which is nice for the cost of living where we live, in South Dakota), drove nice cars, but only had about $20,000 in a checking account.
Let’s say Mary got to keep the house and her car, and half the $20,000 checking account.
Here are the problems:
She has a 20-year gap in her resume, so she won’t qualify for any good positions in the workforce yet. She will have to start over at the bottom and work her way up. So, in our area, she can expect to earn $30,000 at an entry-level position. With that salary, she cannot afford her mortgage payments on the $500,000 house. Within 3 years, the house would be foreclosed on. The $10,000 from the checking account would maybe last 3 months while she is looking for a job, given how she is accustomed to living.
Can you see why it won’t work? Fortunately, Saul acknowledges that as well and is willing to consider the value of his career assets in the divorce negotiations.
Then, it is a game to find the delicate balance of what he will agree to, and what we can make work financially for Mary. Saul may end up paying alimony (spousal support). Or they may sell the house and give Mary the equity in the house. They may give the entire $20,000 checking account to Mary. They may set up a property settlement note. Or a combination of those options.
It’s the art of the deal, as Trump says (gag). I don’t always find it necessary to address career assets in divorce. But in Mary’s case, it was needed. But an agreement wouldn’t have been reached if Saul didn’t recognize that fact. Fortunately, Saul was a level-headed guy who wasn’t out to seek revenge by making the negotiations impossible. He, like Mary, just wanted to find the sweet spot that would make the deal work. And that’s what I call that a successful divorce.