Lawyers will ask you what you want in a divorce settlement. Financial advisers will tell you to be careful what you wish for.
While the overall divorce rate is decreasing, it is increasing for one segment of the population: couples 50 and older. Older couples getting divorced used to be rare. In 1990, one in 10 divorces involved an over-50 couple, according to Bowling Green State University's National Center for Family & Marriage Research in Ohio. By 2010, that number had surged to one in four couples. As befitting a growing trend, it has earned its own pop-culture moniker: gray divorces.
Older couples usually bring more emotional baggage and greater financial assets when they divorce, says Howard Hook, a certified financial planner at EKS Associates in Princeton, N.J. "People's lives tend to be a little more complicated as they get older," Hook says. "We see more complicated situations in terms of splitting assets."
While divorce lawyers will make sure their clients get a fair share of the assets, they may not know which asset is best for each person. For example, Hook says that in some agreements one spouse gets most of the liquid assets while the other gets the house. While the house may be the couple's most lucrative possession, it also costs money to maintain. This can prove especially difficult if the spouse getting the house was not the primary wage earner. Conversely, the spouse who gives up the house loses mortgage and property tax deductions on top of losing the marriage deduction. For someone earning $150,000, Hook estimates this means a 17 percent higher federal tax bill.
Financial advice may also be needed if one spouse never handled financial duties such as balancing checkbooks and paying bills. "It may be so long since they've had to do it -- or maybe they've never had to do it," Hook says. "Now they're 50, 55 years old and they must learn or relearn new skills."
Gray divorces have helped create a new breed of adviser: certified divorce financial analyst. For more information and a list of analysts, try the Institute for Divorce Financial Analysts' website, institutedfa.com. The institute offers free planning work sheets at bit.ly/cdfa-worksheets.
The best time to consult a financial adviser is shortly after you hire a divorce lawyer. "It's important to negotiate the proper assets before the divorce," Hook says. "Because afterward, you're stuck."