By Lee Sherman
Arguments over money are a leading cause of stress in most relationships. And the more money you have, the more it could cost you. When they lead to irreconcilable differences, it may be time to lawyer up. Add to that the fact that, according to a 2017 report by Pew Research, since 1990, the divorce rate has roughly doubled for adults ages 50 and above and tripled for those ages 65 and older and you’ll see that being more established in life can complicate things considerably. The more and greater assets you have, the more difficult it can be to determine who gets what. As you get closer to retirement age, it’s harder to overlook a spouse who isn’t sticking to the budget, or one that persists in making poor money decisions that reduce the couple’s nest egg. Divorce has become so common amongst the older population that there’s even a name for it, gray divorce.
Of course, arguments over money aren’t the only reason why people choose to divorce. High net earners tend to be workaholics and that can place a huge strain on a marriage, especially if one partner is working and the other isn’t. While, in many long-term marriages, both spouses are contributing equally to a couple’s finances, we can’t gloss over the fact that traditional gender roles are still a factor. While divorce after 50 can be scary for both partners, it can be particularly financially devastating for women (who may find themselves having to return or enter the workforce for the first time).
If you’re getting divorced, be prepared to say goodbye to half your earnings. It will likely be the biggest financial event of your lifetime. Financial planning is critical. The best defense is a good offense. It may not be the most romantic notion but wealthy people need to protect their assets. That means making sure you’ve got a pre or post nuptial agreement in place. Before you even meet with a divorce attorney, you should bring in a Certified Divorce Financial Analyst (CDFA). A CDFA is a Certified Financial Planner (CFP) who is also a specialist who understands both the short and long-term consequences of a divorce and can help you navigate these treacherous waters. Remember that a divorce will affect all aspects of your finances, including income (you may have to pay spousal or child support or be prepared to live off less than you were in the marriage) taxes (capital gains on sold-off assets), budgets, and social security benefits. Divorce is also a good time to consider rebalancing your portfolio.
In preparation for your meeting with the CDFA, you’ll need to gather all of your financial information including but not limited to stocks, bonds, mutual funds, real-estate holdings and mortgage info, income tax returns, auto loans, personal loans, checking and savings account statements, credit card statements, retirement accounts, tax returns, life and health insurance policy information, birth certificates and social security info. If you want to protect any personal assets, you’ll need to provide supporting documentation that proves separate ownership, lists of any assets you have that were brought into the marriage, and any pre or post nuptial agreements you may have signed. It’s important that this information is complete and accurate. Besides the fact that it’s illegal to hide assets, the more forthcoming you can be, the more you’ll be protected.
Divorce financial planning is designed to make sure that all parties are equitably compensated and can move on with their lives. With a little help from your CDFA and your family tax attorney, you can make sure to come out the other side with your nest egg intact.
Lee Sherman is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Lee is an experienced journalist and editor with over 30 years of expertise with a significant history of writing in the personal finance and technology arenas.