This article by Quentin Fottrell in MarketWatch might be of interest to readers of this blog.
The Best (and Worst) Time to Get a Divorce
Hedge-fund billionaire Ken Griffin, the founder and CEO of Chicago-based investment firm Citadel LLC, has filed for divorce from his wife of 10 years, Anne Dias Griffin. Griffin, 45, has a net worth of around $5.5 billion, according to Forbes magazine. But consider this harsh reality: Half of all marriages end in divorce, and when it comes to splitting up — even for those outside the 1% — experts say timing is everything.
The divorce rate is on the rise, particularly among older Americans, a new report from the University of Minnesota finds. The report, which used new data from the U.S. Census’ “American Community Survey” and controlled for changes in the age composition of the married population, concluded that there has been a “substantial increase” in divorce rates between 1990 and 2008. Roughly half of marriages end in divorce, says Steven Ruggles, director of the Minnesota Population Center at the University of Minnesota and co-author of the report, “but the rate of divorces in America is at an all-time high.” And bad news for those who hope for success in subsequent marriages: The divorce rate increases with second and third marriages.
Check the forecast for windfalls. If one party’s company is about to go public or he or she is about to come into a bonus or big inheritance, then wait to get divorced, says Shelly Church, a financial advisor at Raymond James in Naples, Fla.
Last month, David Tepper, 56, reportedly split from his wife of 28 years. Most people don’t have the kind of wealth to consider in a divorce as Tepper, who has an estimated worth of $10 billion. Experts say the Tepper divorce would likely have been a lot less expensive had it happened before the financial crisis. When many traders panicked in 2009, Tepper bought shares of troubled banks and earned around $7.5 billion in profit and nearly $4 billion for himself. It’s also important to be mindful of what you say in the media (for public figures) and social media (for the rest of us), says Randy Kessler, an Atlanta-based lawyer who wrote the book, “Divorce: Protect Yourself, Your Kids, and Your Future.” (A spokesman for Tepper declined to comment.)
All such proceeds will be counted as marital property. Last year, Griffin bought four properties in Palm Beach for $130 million, The Wall Street Journal reported. Less wealthy couples, for example those with an underwater home — where the mortgage is worth more than the property — may want to hold off. “During the housing market meltdown, there were often no liquid assets to distribute, Church says. The share of underwater mortgages fell to below 20% in the first quarter of 2014 for the first time in four years and it’s expected to fall to 17.2% by the end of this year, according to real-estate website Zillow. That gradual rise in house prices will help unhappy couples to live happily ever after financially, she says.
Baby boomers like Tepper also appear to be getting divorced at a faster clip. The rate doubled among adults of a certain age between 1990 and 2010, according to “The Gray Divorce Revolution,” a study carried out by Susan Brown and I-Fen Lin at Bowling Green State University. Around 1-in-4 people aged 50 and older got divorced versus 1-in-8 two decades earlier, they found. One reason: Many middle-class people wait until they’re more financially secure before saying “I don’t.” Many couples find that it’s less expensive, less inconvenient and less disruptive to part ways after the children graduate and leave home, says Abby Rodman, a psychotherapist in Boston. (Another theory: “The only way you can get out of a marriage is you can die or you can divorce,” Ruggles says. “People live long enough to divorce.”)
“Health insurance is a fairly frequent reason to hold off and delay,” says Maria Cognetti, president of the American Academy of Matrimonial Lawyers, and a family lawyer in Camp Hill, Penn. In such cases, one party either isn’t insurable or is not insured, she says. “For a healthy middle-aged person, health insurance could easily cost $1,000 a month. Add health issues and it could be a really ugly number.” Health insurance premiums have risen 11% in the small group market and 12% in the individual market, according to Morgan Stanley’s April health-care analysts report. “Every so often you have a decent spouse who says, ‘I don’t dislike you enough to put you out on the street,’” Cognetti says. And, so, they cut ties, live in separate homes, and remain married for the love of their joint health insurance.
When you’re partners in business, it’s best to make sure a divorce doesn’t happen just before — or during — the sale of a company.
L.A. Clippers owner Donald Sterling told Anderson Cooper in a recent CNN interview that he and his wife Shelly are divorcing, but no papers have been filed. The couple has a 50/50 stake in the L.A. Clippers basketball team and his wife Shelly agreed to sell it to former Microsoft CEO Steve Ballmer for $2 billion after Sterling was recorded making racist comments. If the sale was going ahead during divorce proceedings, the court could get involved, says Kessler. ” In the worst-case scenario the court could appoint a receiver, he adds, “but that’s probably not going to happen.”
There are also ethical and moral issues to consider. “There is no perfect time to get divorced,” says Rodman, who also wrote the midlife-divorce book “Until Midlife Do We Part.” But, she says, people should try to mitigate any emotional fallout. “It’s not a good time to get divorced a week before your daughter’s wedding or a month before your son’s graduation,” she says. The holidays are also a bad time to serve divorce papers. “That’s why January is one of the biggest months for divorce filings,” she says. Most unhappy spouses wait until after the turkey has been carved and gifts have been unwrapped. Divorces tend to surge in January, according to an analysis of divorce filings by FindLaw.com, a legal-information website, and continue to rise the following month before peaking in March.
Not only can divorces cost money, but they also exact a heavy toll on a couple’s privacy, Kessler says. For example, the 2003 divorce between former General Electric head Jack Welch and his second wife Jane Welch: When the couple filed for divorce in Connecticut, his GE retirement agreement became part of the public record and was splashed across national newspapers. As a result, the Securities and Exchange Commission launched a formal inquiry. Welch subsequently decided to give up his GE retirement package, which was worth around $2.5 million a year. “In this environment, I don’t want a great company with the highest integrity dragged into a public fight because of my divorce proceedings,” he wrote in a column for The Wall Street Journal at the time.
Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.