When your spouse makes and controls all the money in a marriage, realizing you lack the financial resources to get the necessary legal representation can be overwhelming. In this podcast episode, Jake Gilbreath and Brian Walters answer some of their clients’ most frequently asked questions regarding finances in a divorce and what happens in a temporary orders hearing in Texas.
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Brian Walters: Okay, well good morning everybody. I’m Brian Walters. I’m here with Jake Gilbreath. Welcome to the For Better, Worse, or Divorce Podcast. Today’s topic is one we hear about a lot. It’s a good question. It’s, “What happens if my spouse controls the money in a divorce? How am I supposed to pay my lawyer? How am I supposed to pay my rent or my mortgage? How am I supposed to buy groceries for my kids?” It’s a good question and comes up all the time. So we thought we’d address it.
Brian Walters: Jake, do you want to give us just kind of a quick overview of how that’s viewed by a court and what your options are before filing for divorce versus after?
Jake Gilbreath: Right. And it’s not uncommon, right? I mean, every marriage is different. Some people come in and they, everybody’s got joint accounts and everything’s got a name on everything. And maybe there’s a retirement account that’s just in a spouse’s name, but they’re really open about finances and they share finances. And then you have the other extreme where some people, they, well I guess kind of middle ground, some people have their own accounts but they have conversations about it. They know kind of generally what they have. And then you have the other extreme where everybody kind of keeps their finances separate and sometimes by agreement, sometimes because one spouse is controlling or won’t tell the other spouse despite being asked. And the other extreme, some, one spouse controls, the spouses control their own respective finances, which again, every single marriage is different, right?
Jake Gilbreath: I always tell, my own personal marriage, we have joint accounts. I always tell consults if I went home and told Sarah Good news, I’m going to put all my paycheck and my draws from the law firm in my own separate account. And you just worry about your money, I’ll worry about mine. That wouldn’t be going so well, right? Cause with the way we view it, is we share our finances. But again, every marriage is different. The problem comes to be if when you have one spouse that earns most of the income or all the income and he or she controls all of that and doesn’t give the other side access. So somebody comes in and they say, “My spouse makes a really good income and I don’t know what we have. He puts his paycheck in a separate account. All his stocks and retirements won’t even tell me what it is. I don’t have passwords, got nothing. And that’s really scary.”
Jake Gilbreath: So it’s particularly difficult when somebody comes in they say, “Look, I’m just not quite emotionally ready for a divorce. Something’s going on with my family. Or I just, for religious reasons or I’m just not there emotionally. Is there a way to force my spouse to give me information?” And the blunt answer is there’s not, other than a lawsuit and that lawsuit being a divorce. We don’t have legal separation in the state of Texas, it would have to be a divorce. So we’ll talk about initially how we handle things kind of very offset. But kind of generally speaking, then we can talk in more detail. If somebody comes in and they don’t have access to the finances, I make sure to assure them that we’re going to have orders put in place while the divorce is pending. Like, when a divorce is filed, the very first thing that happens in most situations, is a hearing set that’s called a temporary orders hearing.
Jake Gilbreath: And in that hearing, the court, and we’ve talked about this in another podcast. But in that hearing, the judge makes orders of what kind of rules are going to be while the divorce is pending. What are the kids’ situation going to be, what’s the schedule, that sort of stuff. But not as important as kids. But very important is how we pay for everything while the divorce is pending, a court’s not going to have a situation when there’s resources available, where one spouse can’t pay for his or her bills, or pay for the mortgage, or even pay for the attorneys. So it’ll get fixed to that hearing. Now that hearing can take a couple few weeks to get set, but a judge is going to put in place these ground rules. So one spouse isn’t just controlling everything while the divorce is pending.
Jake Gilbreath: So just Brian kicking it back to you? Consider talk about the logistics of that temporary orders hearing, what that looks like. And then we can sort of go backwards a little bit and talk about that initial, that gap between filing for a divorce and the temporary orders.
Brian Walters: Right, yeah. So that hearing, I always think you should put yourself in the judge’s shoes when you’re a lawyer and what do they want to hear, right? They’ve got 20 cases to deal with that particular day. So they want to get to the point, they want to know who earns money? Where is the money, especially liquid money. So that’s things like checking account, savings accounts, stocks and bonds, non-retirement type investments, non-real estate type investments. Basically, things that you could turn into money in your checking account within three days, is what I would call liquid. And so that’s, I always try to put together a property spreadsheet, which is kind of an Excel-looking document that list the assets and debts. But the focus is always on that liquidity. And because what’s going to happen almost immediately in a divorce is, there’s going to be two households instead of one.
Brian Walters: There’s going to be, so you got two electric bills, two mortgage payments or two rent payments. You’ve got, now you’ve got lawyers to pay, so your expenses go up but your income stays the same. Which for a lot of people, means that they’re going from living with kind of paycheck to paycheck to being in the hole. And now and then we have a problem, because now maybe they were paying all their bills, but now they’re several thousand dollars more a month in expenses and they don’t have a way to pay it. So the court’s going to try to think ahead three to six to nine months at that hearing about, “I got to get a roof over everybody’s head, I got to get the kids fed, I got to get the bills paid, I got to get the lawyers paid. But I also don’t want to give one side or the other unlimited access to funds. I don’t want to give one side an advantage over the other.”
Brian Walters: So they’re trying to weigh all of those type of things. And that can be difficult and it can be a little bit unpredictable. Some judges are very strict about trying to control the finances. I think that they also try to think ahead, this is not an alimony state. And so they try to, the lower earning or non-working spouse is often put on a fairly short leash, as far as how much monthly income they’re going to get from the working spouse. To let them know that that day’s coming and you need to think about work or think about a different way to pay your bills. So those are all the things that go through the court’s head. I think those are probably the way most judges think of it. There’s a few outliers here and there, but that’s shouldn’t be the way it’s approached. Has that been your experience?
Jake Gilbreath: Yeah, definitely a few outliers, and everybody has their different approach. But I sort of view temporary orders. It tends to be more of a logistical discussion than any, right? Judges are going to sit there and both sides come in and consult with us sometimes. But sometimes spouses have this attitude of, well this is my account and this is my money. I earned it and so I don’t have to pay anything. Or her lawyer or his lawyer or what have you, this is my money. And that’s just not how it works. And sometimes you have the clients, I was doing a consult earlier this week where, not in a mean way. I mean, my client that we have, just was of the impression that I earned this money so this is what I get and then I paid these bills and I paid for this mortgage then so I’ll take my money.
Jake Gilbreath: She takes her money and we’re done. I mean if there’s a premarital agreement that says that’s what happens then yeah, but otherwise it’s a community property state. It is a financial partnership. Marriage is a financial and emotional partnership. And so, it’s maybe this spouse paid for this bill or it came out of this account or that account. It’s like y’all, it’s all community property. I mean obviously there may be separate property and the courts do try to protect that on temporary orders. But otherwise, it’s community property and it’s just how do we get this accomplished, right? And just like you said Brian, it’s like how do we make sure this is accomplished to where everybody pays their bills. But we’re thinking diligently about the future and we’re making sure attorneys get paid. And I know that sounds kind of self-interested, but the courts want to make sure that both sides have lawyers and good lawyers. And frankly that one side doesn’t have an advantage of the other.
Jake Gilbreath: I mean, how would that be fair if let’s say the wife controlled all the finances, went out and hired a lawyer. And then won’t pay for the husband’s lawyer or the wife’s lawyer. The courts just aren’t going to have that. Again, few outliers, the court just aren’t going to have that. They’re going to make sure that there’s parity and everything’s fair while the divorce is pending. So, that hearing can take couple weeks to get set. And yeah, I will say, a lot of times they get worked out. Particularly we have good lawyers on both sides, because good lawyers will tell their clients exactly what we’re saying right now. This is a logistical discussion y’all, I hear you. Maybe you think that this deal is too high or this lawyer’s too expensive. Do we really want to go spend money arguing about money? And that’s just a conversation it has to have, the lawyers have to have with their clients.
Jake Gilbreath: And sometimes it does make sense, a lot of times it doesn’t make sense. Like, let’s, we’re not getting along, we’re getting divorced, but can we get to point A to point Z without a bunch of money being burned on temporary orders? Again, sometimes you have to, but it’s better if folks can kind of work out this logistical discussion. Because the lawyers are going to know more about the finances than a judge that’s going to hear temporary orders. Depending on your county. If you’re in Travis County, you may hear temporary orders for three to six hours. Denton County, you may get 20 minutes, literally 20 minutes aside, to sort of figure this out.
Jake Gilbreath: So it makes more sense for there to be good lawyers on both sides working through it. And then as you can have an, work it out, then going to temporary orders. Those hearings can be long, they can be short, just sort of depends. But Brian, so what happens to this gap though? A temporary orders hearing can take, depending on your county, you can be in court in a couple weeks, you can be in court in a month. So what do you talk to clients when they come in and they have limited access to resources and we’ve got to get from filing of the divorce to temporary orders.
Brian Walters: And there’s a variation on this too, which is, let’s say that there’s $40,000 in a checking account and that’s kind of all there is, but nobody’s filed for divorce yet. That’s a question I get a lot of, “What do I do, can I take all of that money?” Let’s say it’s in a joint checking account, “Can I take all the money? Can I take none of it? What do I do?” Generally, I think the court would expect people that case to take half. If you’ve got some exceptional circumstance, somebody you know just don’t have any income, you’re not going to get some any time soon. The other side has got access to a lot of credit or they’ve got a big check coming in from somewhere. It might be a little bit different. But I think that’s generally the approach is, like you said, it’s a business partnership, a financial partnership and so half would be appropriate.
Brian Walters: But you’re right, there is this gap and if there’s not access to funds, then it can be a problem for a while. And what you do, generally have to do in that situation is you have to borrow. If you don’t have access to those funds in one way or the other, the easiest way to do it would be to go take a credit, a joint credit card or a credit card that’s, from a joint account or tied to a joint account or something like that and borrow from that. You’ll run up, if you have to pay your lawyer retainer fee, which you will then put it on that. If you need to use that to go spending, to buy groceries, go ahead and do that. But that may not be enough and it may not be possible to pay some expenses that way.
Brian Walters: So you can borrow if you have other assets that are not liquid. Some people have to go into their retirement and take a short-term loan or even take a withdrawal from it. That, the withdrawal can have, will have tax consequences and possibly some penalties as well. So that’s not ideal, but it’s better than not having funds. But otherwise you can be in a tough situation for a few weeks. And you may have to go to your friends or family or just start calling around to financial institutions and say, “Hey, can I get a credit card?” And that’s no fun and it’s not fair, right? I mean, it’s not fair if you have to do that in your spouses running around with all the money. But it does happen and the court can’t do anything about it until you get to court. Now if your spouse has a good attorney on the other side who is realistic and your spouse is wanting to do the right thing, and those are two very big ifs.
Brian Walters: Then generally, once your lawyer is retained and calls the other lawyer there. And says, “Look, we don’t have any money. Your client ran off with a $100,000, we need half of that back.” A good lawyer will tell that other spouse who’s got the money, “Hey, you’re going to have to pay that back. She, your spouse is going to get access to funds.” And like you just said, we’re going to spend money to go give her something she’s going to get anyway. And sometimes that resolves it, but sometimes not. So you have to be prepared either way. Is that sort of the way you see things?
Jake Gilbreath: Yeah, and that’s something I say in conflict a lot, which surprises people, is ironic. I’m not sure if it’s ironic or not, but in most situations, probably all situations you actually want there to be good lawyers on both sides. Which is just surprising to some people. They expect that I tell them that I want the other side to hire a bad lawyer. We can steam roll them and everything. Bad lawyers, frankly, just make things really expensive and difficult. If they don’t know what’s happening, if they don’t have the experience and they’re not giving their client good advice, then you end up having silly fights, right? It’s like there’s $250,000 in cash in a checking account controlled by the wife and she won’t. And the husband’s living off a prepaid debit card or something. And you roll into court three weeks later, judges going to, and they haven’t given any funds because the lawyer’s saying don’t pay them anything.
Jake Gilbreath: A good lawyer will say, one, “Probably a good idea to make sure that this gets paid,” right? Obviously within limits and we’ll get rules in place. But two, “This is going to look bad in court.” We’re rolling in three, four weeks later in front of a judge and explaining to her that you’ve got access to all these funds. And you’ve been going bananas and you won’t even pay the car payment for the other side or his or her lawyer’s retainer fee. That’s not going to look good, right? And it’s going to affect what the judge does moving forward. Because that judge, she’s going to think, “Well why would I give this spouse control he or she was in control the last two or three weeks, and look what happened.” So yeah, good lawyers actually make things, tend to make things a lot less expensive. You know we’ll still go to court, right? There’s great lawyers out there that, a lot that I’m really good friends with will go to court all day long, right?
Jake Gilbreath: We’ll go try jury trials against each other, multi-day temporary orders hearings, if we have to. And sometimes that’s just necessary, but sometimes, you can just get good advice on both sides and spend your money where it matters, rather than arguing about logistics.
Jake Gilbreath: But back to the issue about borrowing or credit cards, that’s not a fun thing to tell, something that’s coming in, look, you need to go look to borrow this. But we do have that conversation and we do try to be really frank with people, because I think it’s fair. It’s only fair to clients that they have the honest discussion about finances and what lawyers cost and what bills are going to look like. I mean, the worst is when lawyers come in and they sign-up on that initial consult, they try to sign-up the client by blowing smoke, and not being honest about what it is.
Jake Gilbreath: And the reality is, it’s a difficult process, it’s an expensive process. It’s going to be a tight, tight on everybody’s finances because like you said, Brian, it’s two households. And the reality is there’s going to be this initial retainer that’s paid to the lawyer. Unfortunately, we have one business, we practice law, we do family law, we do some personal injury work, that’s what we do. We’re not a bank, we’re not set up to loan people money. There’s actually ethics that control what we can and can’t do in certain cases, and it’s just not us. It’s our job to go to the temporary orders hearing and get things fixed and squared away. And it’s important to remember that at that temporary orders hearing, if you had to borrow or put it on a credit card or borrow from a bank or family, the court’s going to be in a position to be able to fix that on temporary orders.
Jake Gilbreath: I had to borrow $10,000 for my mom for a lawyer retainer. Well, three weeks later, when you’re in front of a judge on temporary orders, if there’s community funds available, in most cases the court’s going to get that paid back. It all goes back to sort of logistics and stuff. But that’s something we talk about in the initial consult way more than any of the law firm, makes sure to have honest discussions about retainers, what they look like, what the costs are going to be. So you have the information that you need so you can go plan for the future. Cause at the end of the day, that’s what it’s all about, it’s planning and communication.
Jake Gilbreath: And so, if you’re having a consult with me or Brian or someone of my firm or firm, that would be, that’s part of the discussion, right? It’s just how do we get you from the initial consult filing for divorce to these temporary orders, whether they’re worked out or we have a contested hearing in a few weeks.
Brian Walters: Yeah, I agree. Okay. Well, thank you guys for listening. You can contact us. We always appreciate reviews and any feedback about additional topics you’d like to hear about or more about particular ones. Thank you for listening.
For information about the topics covered in today’s episode and more, you can visit our website at www.waltersgilbreath.com. Thanks for tuning in to today’s episode of For Better, Worse, or Divorce, where we post new episodes every first and third Wednesday. Do you have a topic you want discussed or a question for our hosts? Email us at firstname.lastname@example.org. Thanks for listening. Until next time.