What a shock that Bill and Melinda Gates, ages 65 and 56, respectively, are divorcing after 27 years of marriage.
Still, “they’re just another data point in the trend” of gray divorce — couples aged 50 or older who split after long-term marriages, says Haleh Moddasser, financial advisor with Stearns Financial Group, in an interview with ThinkAdvisor.
In fact, “post-pandemic, gray divorce will probably go through the roof,” predicts Moddasser, senior vice president and lead advisor of SFG’s Chapel Hill, N.C., office who specializes in issues of divorce.
Gray divorce — “gray” signifying that the couple is older — usually manifests in marriages of 20 years or longer, according to Equitable Mediation.
At a time when the overall U.S. divorce rate has dropped, gray divorce — typically occurring among baby boomers — has doubled since 1990, reports Bowling Green State University National Center for Family & Marriage Research.
For people aged 65 and older, it has roughly tripled.
Moddasser argues that the coronavirus pandemic caused couples cooped up at home and already in bad marriages to postpone divorce even as they realized they needed to seek a more satisfying life.
What does the gray divorce trend mean to FAs? “Somebody is going to need a new financial advisor,” is the way Moddasser frames it.
Helping folks, especially women, through the financial intricacies of divorce “often results in very loyal clients,” she says.
In the interview, Moddasser, author of “Gray Divorce, Silver Linings: A Woman’s Guide to Divorce After 50” (Amazon 2017), discusses why later-life divorce differs from the often acrimonious split-ups of younger couples.
Usually it is the wife who initiates gray divorce. But should she fail to be aware of and understand the marital assets, she is “at risk of irreparable financial harm,” stresses Moddasser, who leads Stearn’s women’s advisory practice.
The FA focuses, too, on environmental, social and governance investing. Her book “Women on Top: Women, Wealth & Social Change” (Amazon 2020), explores that arena.
Before joining SFG — registered with Hightower Advisors — in 2011, the CPA was with PricewaterhouseCoopers and Burlington Industries.
In the interview, she talks about a number of relative issues, including Social Security, hidden assets, heritances – and one of the biggest mistakes gray divorcers make.
ThinkAdvisor recently held a phone interview with Moddasser, who was speaking from North Carolina. She maintains that “often in gray divorces, the spouses don’t hate each other” because they still feel that they’re family.
Here are highlights of our interview:
THINKADVISOR: What effect has the coronavirus pandemic had on the incidence of gray divorce?
HALEH MODDASSER: Just as weddings have been postponed, so have divorces. Post-pandemic, gray divorce will probably go through the roof.
In the pandemic, couples who had been sustaining a marriage where the thrill is gone all of a sudden were trapped together in the house. They found they had nothing in common — even worse, they found they didn’t like each other anymore.
COVID got people thinking about what’s really important to them.
What do gray divorces mean to financial advisors?
They represent money in motion and that, generally, somebody is going to need a new advisor. It’s a great way to tap into that market.
When someone in the gray divorce age group comes to you saying they’re going to divorce, how do you start helping them?
The first thing I tell any woman or man is that they should be completely knowledgeable about their finances. If you don’t have a clear picture of the financial landscape, you’re going to be at a major disadvantage.
So many women have no clue. They don’t know if they have a 401(k) plan. They need to get familiar with their finances.
In your book, you write that “women of gray divorce are at risk of irreparable financial harm.” Please elaborate.
She will leave money on the table because she didn’t understand the value of the estate beforehand. Often the husband is still working, but she has no income.
And much of the time the women just don’t get good advice from their attorneys because they aren’t financial people. They’re not looking to see: “Are these assets enough to take care of you?”
In the vast majority of cases that I see, the husband achieves or exceeds his marital standard of living, while the wife’s plummets for a variety of reasons, including: She wants to keep the house, or she doesn’t trust the stock market.
Typically a married couple has one advisor. Should each spouse have their own when divorcing?
In a gray divorce, usually the advisor is a guy and, kind of, buddies with the husband. What I see is the women reaching out to a woman advisor.
She might say, “I’m considering leaving my husband, and I don’t know anything [about finances]. Please help me.”
Who most often initiates a gray divorce?
Two-thirds of the time it’s the woman who leaves because they’re sick and tired of the caregiving role.
She’s going to be splitting the assets and doubling her expense footprint. But she feels, “I don’t care. At this age, it’s about happiness.”
She wants to be financially secure, but her personal happiness in the last part of her life trumps financial issues.
Where do you begin when working on a gray divorce case?
We gather what we think are the marital assets. We do a financial plan. The husband is happy to just have his stockbroker and to know the value of the assets. So he’s not necessarily doing a plan.
However, sometimes I work with both and try to create a win-win situation. In boomer divorces, [usually] the husband has earning power, but the wife hasn’t worked in decades.
I find that in most situations, the men want their wives to be OK financially because they’ve spent a lifetime together. Often in gray divorces, the spouses don’t hate each other.
How do you usually structure the financial plan?
You can start with a 50%/50% split of the assets, though lots of times it’s not half and half because the spouses — especially the wife — need to determine the costs of living alone.
Having a sense of that before you go into a negotiation is extremely powerful because you know what you can and can’t accept.
What about the issue of hiding assets? Have you encountered that?
Yes. One spouse may have a job offer but wants to keep it secret because it will hurt what they get in the settlement.
Then there are the more nefarious cases where people open offshore accounts and funnel money into them or create trusts that both spouses signed when times were good — but the fine print says the wife or husband doesn’t get anything.
Is it a good idea to have a prenuptial agreement?