Even amicable divorces can become complicated quickly, but that complication is baked in when a couple has been together for decades. These divorces after long-term marriages have been coined, gray divorces, and they present many financial issues because the couple has intertwined their finances for decades. This makes the property division process extremely complicated.
A game plan is essential
A study by Ohio State University found that divorces reduce familial wealth by over 75 percent over the long-term. This is a real, and significant amount and is only exacerbated when divorce happens later in life. Of course, if one is Jeff Bezos, a divorce likely will not have such a sever affect, but for most people divorce has real financial consequences, which is why planning is so important.
Keeping a level head
Nearly all experts agree that spouses should check their emotions at the door. Fighting over everything because one feels justified or wronged will only increase the length and cost of a divorce. Remember, every interaction with an attorney and every fight the attorney must fight means additional money that is taken out of the marital estate. The less money that is in that estate mean the less money that is divided. And, for those later in life, with less earning time for retirement, this can be a significant consequence of not having an amicable divorce.
Think about retirement differently
We recommend having a financial expert on the divorce team to ensure that one can look at assets holistically and not necessarily in a binary, or traditional manner. This is most acute for retirement accounts. Perhaps, one has 401(k)s, annuities, brokerage accounts, etc. These all may be at all time highs right now or all-time lows. Think about what those accounts may be worth in the future, and also think about the value of other assets in the future that may be able to compensate for those accounts. Remember, withdrawals from retirement accounts often come with tax penalties. And, the key is trying to figure out how to maximize the marital assets.
The key takeaway for our Harrisburg, Pennsylvania, readers thinking about divorce, is that it is very seldom a good thing to go through alone. One needs an advocate and someone that can help them think through these issues to maximize their post-divorce life.