Fair & Equitable…. IS IT REALLY?

Michelle Jacobik Divorce Leave a Comment


My heart bleeds every time I get a call and meet with another woman POST-DIVORCE who felt that what she agreed to was one thing and she now sits down to see that what she ended up with was something else!

What appeared to be ‘fair and equitable’ was really not!Michelle Jacobik

Abby came to me at the recommendation of her therapist who knew all too well the aftermath of single mom’s going from a two income household to one.

She had been there herself…

Our first call was really an introduction of sorts to get to know each other and what I might be able to do to help her navigate and learn how to life this new life as a single mom, now on one income and just enough child support to cover the kids school lunches and after care program.

 She had never had to budget, there was always enough.

Her ex-spouse was an engineer and she was a nurse.

They had a nice house and for the most part lived within their means.

They opted to agree to mediation to try to keep their legal costs of the divorce down and to not deplete their only cash savings of $30,000.

Unfortunately, while that was the best decision financially in comparison to the high costs that come with separate attorneys to ‘fight it out instead’, there wasn’t much left when the process was over and the ink was dry on their divorce papers.

Final accounting looked like this:

$6200 of it towards mediation costs & the cost of the professional evaluations done to segment retirement/stocks, $8,000 to pay off joint credit cards, $3,600 of it to appraise the house and to cover refinancing costs to get the home in her name only and $4,000 for Jim to cover his moving expenses and get him into his new condo. The rest was split equally at $3800 each.

This is what those numbers looks like…


Professional Fees

Towards mediation costs & the cost of the professional evaluations done to segment retirement/stocks

Credit Cards

Pay off joint credit cards

House & Finance Cost

Appraise the house and to cover refinancing costs to get the home in her name only

Both earned a decent wage but now were both living with one income…

Due to Jim’s requirement to travel many times during the week, they had agreed she would have the kids during the week and Jim would have them every Wednesday evening and every other weekend.

He was ordered to pay child support of $200 week.

Abby ran the first three months of her new single life as if nothing had changed.

When she came to me, she had already bitten into $418 of that $3800 in savings and her car was in need of new tires & brakes for the winter which was starting to rear its ugly head.

“How am I going to make this work?” she asked.

I feel like even though I have the support coming in it’s just not enough.

I have nothing to fall back on in savings if something major were to happen to the house or the car and if I fell short one month.

This is horrible!Abby -

We went through the divorce agreement and the assets that were split.

She was coming to me to create a spending/savings plan (budget!) and also to see about cashing out some of the stocks that were given to her as part of the settlement agreement.

“I kept the $50,000 in stocks and he kept his $100,000 401(k).”

I was thinking I could cash those out so I would have cash and something to fall back on, but now with the market the way it is, and interest rates on the rise…

I feel like I can’t risk having this money out there and not accessible and I need to cash them out NOW”

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The first thing I did was ask her for the ‘cost basis’ of the stock.
(The original purchase price).

She said they had an initial investment of $6500 and the stock had grown another $43,500 over their 17 years of marriage.

I asked her if the mediator had taken into consideration the ‘capital gain’ on that stock when they figured out the asset allocation.

She indicated no. It was never brought up.

“We were just trying to come up with ‘equal’ amounts on each side of the spreadsheet so everything was 50/50”

Here I was again, sitting with someone who didn’t have the whole picture of ‘fair and equitable’ AFTER taxes.

I proceeded to show Abby that cashing in her $50,000 of stock would create a long term capital gain (the stock was held more than one year) which posed a 15% tax of $5550 on the sale of the stock, now netting her only $44,450.

Tax Ramifications
That came right off her bottom line


While this may not seem like a big deal to her it was.

There was no going back to her ex-spouse and getting him to agree to make up that difference now! While his asset (the 401(k) ) posed no negative to him, what seemed ‘fair & equitable’ on her side just changed.

It is truly important to have a financial professional look at the WHOLE picture when the asset division discussions are going on to be certain that the ‘fair and equitable’ that you are agreeing to truly is just that.

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Michelle Jacobik

Expert in Money, Business & Finance #1 Best Selling Author & Speaker

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