WTOP Interview - Can You Afford Your Gray Divorce?
Shawn Anderson: In the past few decades it has become more common for married couples to split up later in life, it is known as ”Gray Divorce”. Couples calling it quit after the age of 50 face increased financial pitfalls that could jeopardize their current life-style and future retirement years.
Hillary Howard: Joining us live to talk about it; Dawn Doebler Senior Wealth Advisor at Bridgewater Wealth in Bethesda and cofounder of ”Her Wealth”. Hello Dawn!
Dawn Doebler: Hi Hillary!
Hillary Howard: So what are the financial consequences of splitting up later in life?
Dawn Doebler: Well;
The first point I want to make is that one in every four divorces is a great divorce and even though most of us over age 50 don’t necessarily have gray hair, that’s what we’re calling divorces that happen over the age 50. So some of the things that can be devastating financially, retirement certainly is put at risk. We find that a lot of times one or both of the people in the couple have to delay retirement because of course now they only have half as many assets to live on.
The decisions about who keeps the family home; later in life a lot of wealth is tied up into the family home and even though there are emotional reasons and usually one of the couple wants to keep the home, it can be difficult; they don’t have enough assets to trade in exchange for the value of the home.
And the third one is, sometimes it can be difficult to split assets. I’m working with someone now with a lot of hedge funds. It’s a complicated asset; it cannot be split, very difficult to have an agreement signed. When that’s the case, many people own businesses; you can’t really split a business, tough to create liquidity for one of the people in the partnership. This is why understanding ”Gray divorce” is important. A lot of women who consider themselves to be wealthy often don’t end up with as much as they expect because of the challenges and settling.
Shawn Anderson: You are a certified divorce financial analyst and I’m sure a lot of our listeners have never heard of such a thing, so talk about that position and how you help those going through a divorce?
Dawn Doebler: That’s right. So it’s called the CDFA and CDFAs can be very helpful in going through the issues related to what we just talked about. Looking at various settlement options, if there are complicated assets, usually there are significant tax ramifications. There’s long-term financial planning that needs to occur and often people can’t do this on their own. So you might have a CPA or another advisor, but it usually takes the CDFA to understand the divorce process and to help run scenarios on the various ways the assets can be split and things can be settled.
Hillary Howard: Most people are familiar with pre-nups of course, but you say that post-nup is important and quite frankly I didn’t know what a post-nup was Dawn!
Dawn Doebler: It is actually not, certainly not as well-known as a pre-nup. A post-nup is just kind as it sounds; it is an agreement that occurs after a couple gets married. And what it does is, it lays out the couple’s assets and it also lays out how the assets might be split and how an agreement might be reached if the couple decides to separate or divorce. I’ve seen it work very well in the case of let’s say a rocky marriage and or if one of the partners doesn’t necessarily know what they have in assets. It lays it all out and it puts both of them on the same page as to what would happen if a divorce occurs. And often times it can motivate people to work on the marriage.
Shawn Anderson: Lots of important information there, thank you so much.
Dawn Doebler: That’s right, thank you.
Shawn Anderson: Dawn Doebler Senior Wealth Advisor at Bridgewater Wealth in Bethesda. For more, go to WTOP.com search Her Wealth.