At The Money: The Finances of Divorce with Patrick Kilbane (February 4 , 2026)
Divorce is an expensive, confusing, and stressful experience. Dividing up family assets, including not just the family home, but portfolios, real estate, trusts, and other businesses. There are big mistakes to avoid.
Full transcript below.
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About this week’s guest:
Patrick Kilbane is General Counsel of the RIA Ullman Wealth Partners, where he leads the Divorce Advisory Group. In addition to his years as a divorce attorney, he is also a Certified Divorce Financial Analyst (CFDA) and Wealth Advisor at the firm.
For more info, see:
Professional Bio
LinkedIn
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TRANSCRIPT:
Is there any life event that’s more expensive, confusing, and stressful than a divorce? You’re not only dividing your family, you’re also figuring out the disposition of a lot of assets: portfolios, real estate, trusts, businesses, more. I’m Barry Ritholtz, and on today’s edition of At the Money, we’re gonna discuss the finances of divorce. And full disclosure, I am and remain happily married for 32 years.
To help us unpack all of this and what it means for your portfolio, let’s bring in Patrick Kilbane of the RIA Ullman Wealth Partners. He’s General Counsel for the firm, and also leads the Divorce Advisory Group.
So Patrick, let’s start with the basics. You focus on people. Going through divorce, what’s the first financial triage you do when a new client calls?
Patrick Kilbane: Barry, great to be with you. Thank you for having me. When somebody gets hit with this bomb, when this bomb is dropped on them, you know, I, I’m a, I’m a big fan of Coach Lou Holtz and he has an acronym WIN, and it stands for what’s important now.
So I generally talk to the person who this might be their first exposure with the legal system. And I figure out what their goal is – has their estranged spouse cut them off from the cash flow from the assets? Is this a child custody situation? You know, what is the first thing that we need to handle?
And then it’s sort of giving them the confidence and the reassurance that, hey, you’re not the first or the last who’s gonna go through this, and I’m gonna be your Sherpa through this process.
Barry Ritholtz: I imagine there are some consistent large money mistakes people make in the first 30 to 60 days of a separation. Obviously it’s very emotional and you know, most people don’t go through these sort of things repeatedly. What sort of mistakes do you see before the lawyers and the written agreements start showing up?
Patrick Kilbane: Like most people who have a long history together, they. Have solved a lot of problems together; I see people trying to work the divorce settlement out among themselves. The spouse that may not have all of the data, all of the information, may not know the extent of their holdings, may make some agreements before they have any idea. What their rights are.
Like you, Barry, I’m a lawyer, although I’m not practicing anymore. I litigated high-net-worth divorce cases for 10 years. And what I try to do is not give legal advice, but say, Hey, let’s slow down a little bit and let’s make sure that you have a full understanding of what you agreeing to or waiving before you do it.
Barry Ritholtz: I think about all the assets that are involved in a family dissolution. There’s cash, there’s retirement accounts, there’s property, there’s business interests. How do you help clients understand the value of what they’re negotiating, either cash upfront versus a longer-term set of assets?
Patrick Kilbane: I try to divide everything into different buckets, so I make sure that my clients aren’t comparing apples to giraffes. They’ve gotta be comparing apples to apples.
Depending on where the spouses are situated and where each one of them wants to go, we know that all assets aren’t created equal. So there may be an opportunity to work together. To reach a divorce settlement that’ll be more advantageous for both spouses than what they would end up with in court, if the court just took a meat cleaver and busted everything in half.
Barry Ritholtz: You have a background as a matrimonial lawyer. How does that change the way you sit down as a financial advisor when you’re having these conversations with clients who are just starting the divorce process?
Patrick Kilbane: I have a perspective from litigating these cases for 10 years and seeing people at the very beginning of the process, and I think a financial planner, a wealth manager, an asset manager who may not have that same experience, may want to get right into the details.
You mentioned the word triage earlier in this conversation. This client, this family is coming to you, they are experiencing trauma. The wound may be fresh, so I think we really have to slow down. And it’s sort of like, you know it, when you see it, you’re ready to delve into the financial planning and start talking about Barry 2.0 when Barry is ready to start thinking about Barry 2.0.
But a lot of these people come in and they’re at a total fog. They’re trying to figure out. Where their next dollar is gonna come from? How is cashflow gonna go? Where am I gonna live? So we have to sort of satisfy that basic level of Maslow’s hierarchy of needs before we can even get into that financial planning conversation.
Barry Ritholtz: The past few divorces I’ve witnessed from relatively close, the big question becomes who gets the house? It always seems to be one of those things – it’s an emotional decision, it’s a financial decision. Is there a better framework for addressing that? How do you avoid that from becoming so toxic, so War of the Roses sort of a disaster?
Patrick Kilbane: I think you have to really start and understand why somebody wants the house. You made a great point. Is this an emotional decision? Is this a financial decision? Do I have comfort in my neighbors? Is the house in a public school district where I want my children or child to continue to go to school until they reach the age of 18?
And then once you really have a good idea why that’s the case, maybe that spouse wants the house just because they know the other spouse wants the house. We have to take a step back and understand the true motivations. And then we start talking about the financial problems and the tax problems that come.
A married couple, if this has been your primary residence for two of the last five years, you can exclude up to half a million dollars of a capital gain if there is one. Of course. If you’re single, then you can only exclude up to $250,000 of the gain. What’s the basis? Do we have a state tax situation? There are a lot of different layers,
Back to my previous comment, I don’t think we can even hit on that until we have a true understanding of what the client’s motivation is and when they’re emotionally prepared to have that financial discussion.
Barry Ritholtz: You mentioned taxes, it’s easy to imagine how taxes can just flip the math.
What are the big tax traps in divorce settlements to avoid?
Patrick Kilbane: All of these assets are different. They may be tax at ordinary income rates, capital gains rates. Your audience is sophisticated, but some of our clients who are going through this process are also very sophisticated, but that hasn’t been their role in the household.
A lot of it is re-educating them and understanding or trying to have an idea what is their tax situation going to be post filing, they may be in a totally different tax filing status. They may be going back to work. They may not be going to work. They may have investment income imputed to them. They may have to use IRS, uh, rule 72T if they’re before 59 and a half to be able to tap into retirement accounts, um, because of imputed investment income.
Of course, those laws vary by state, but that’s why it’s so helpful to have somebody who really knows that perspective and can work with the various tax and estate planning professionals to be thinking about these issues.
Barry Ritholtz: What about retirement assets? What do people need to know about avoiding penalties or getting a bad allocation? There’s a whole other QDRO thing that I’m wholly unfamiliar with. What are the issues in divorce with? 401Ks, 403Bs. IRAs. Any joint or individual retirement asset?
Patrick Kilbane: Quadro is an acronym that’s, uh, stands for qualified domestic Relations order. It is a subsequent court order that it, that is used to segregate a retirement plan that’s subject to ERISA (Employee Retirement Income Security Act). But if your spouse is a participant in a government plan, a government plan may not accept a QDRO, then how in the heck do we divide that marital asset?
It always requires us to stay, take a step back and get a hold of a document called a summary plan description. Which sets out the rules and regulations of each retirement account.
We’ve heard people say all the time, the only way to eat an elephant is one bite at a time, and whether it’s a retirement account or some other asset, we have to be very intentional and very careful and go with each asset.
What is it? Is it a qualified or a non-qualified account? How do we divide it? What are the tax consequences? There are other contingent assets, like carry and restricted stock and so on. But what’s the best way to actually accomplish this on each asset?
Maybe with that asset, with that asset, we say, wait a minute, I don’t want to have to deal with my estranged spouse in the future to get my fair share. Isn’t there a way that I can barter this away and get something else that works better for me? So those are all the discussions that are asset by asset level.
Barry Ritholtz: That’s complicated. Let’s talk about something even more complicated. What do you do with illiquid assets, private businesses? Hey, it’s easy to split a portfolio of publicly traded stock. What do you do about a company that is private and one of the spouses is running, and how do you you know, figure out what it’s worth and who gets what?
Patrick Kilbane: You and I can look at our brokerage account statement or retirement account statement. Have a pretty good idea what that asset is worth with an asset that we know that has value, but we’re not sure what that value is. You are required to hire another professional called a business appraiser or a valuation expert.
And the crazy thing about the divorce world, Barry, is it imposes these. Fantasy rules and regulations that you and I would never, you know, have to discuss with a married couple. We talk about enterprise, goodwill and personal goodwill when we come to the value of a business.
A valuation expert can say, okay, this firm is worth X, you know, million dollars. But in a divorce context, especially my home state of Florida, we have to look at what’s the value of Barry’s firm, without Barry? And the value of Barry’s firm, without Barry, that’s the marital asset in Florida, that’s what we have to divide.
So a year prior, somebody may have offered to buy the family business for $15 million, but if you take Barry outta that family business and the value of the office buildings and the furniture and so on and so forth is a million, then the marital share is 500 grand. And you have a spouse thinking, wait a minute, I’m gonna end up with seven and a half million dollars of this asset. But really it may be half a million dollars or you know, and you can pick any other example.
So you need that expert. And then you need to understand how the state dissolution of marriage laws apply to valuing that asset within the context of a divorce.
Barry Ritholtz: What do you tell clients about cash flow planning right after the divorce? Suddenly, whatever emergency funds, credit, even just a household budget, all that stuff gets thrown out of the window. How, how do you rebuild that? How do you face that first year of spending reality?
Patrick Kilbane: In the context of the divorce negotiations, I try to help my clients and lawyers think about asking for a larger-than-normal emergency savings fund.
We talk about “this is how much money you have to spend on a monthly basis,” But that first year where this now single person is in charge of their monthly budget, there may be some surprises, and there may be a learning curve, and so on and so forth. I aim to build that experience and, even if it’s not an alimony case, help settle the case if alimony is possible for a short period to help with that transition and ease somebody into being responsible for probably the first time in a long time for managing their own cash flow.
Barry Ritholtz: Final question. If you could give one piece of advice to someone starting the divorce process, what’s the best decision or even document that improves the outcome for everybody?
Patrick Kilbane: In my state, there is a document that’s required to be filed by each party in every case, and it’s called a financial affidavit. I see in New York, it’s called a net worth statement or so on and so forth.
It is a daunting, overwhelming document, but really it’s a forum that. You’re normally required to, you know, sign, you take an oath and say that what you put on here is truthful, but you outline all of your sources of income, all of your expenses, all of your assets, and all of your liabilities.
From a financial standpoint, if you can take the time and make that as accurate as possible, um, that’s gonna really go a long way to helping you, your lawyer, and the other financial professionals on your team to get a really precise idea of what we’re dealing with.
Spend that time, take the time upfront, and you may not have all the information that you need to answer that question until you get the discovery from the other side. And what I tell people all the time is, that’s okay. Disclose it, and then put a footnote that says, “Hey, I don’t have this information. And when I get it. I’ll update it” and then when you really break it down like that and let people know, Hey, you can amend this document, I see them start to relax a little bit and say, okay, I got this.
Barry Ritholtz: To wrap up, I’m gonna quote Patrick, “Divorce is really a financial or tax problem disguised in a divorce costume.” And that really sums it up. It’s as much about. Separating your personal lives as it is to figuring out your financial and asset lives going forward. Take it seriously. Make sure you get good counsel and follow the process that your lawyer and financial advisor walk you through.
I’m Barry Ritholtz. This has been Bloomberg’s at the Money.
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