March 1, 2017

WTOP Interview - Can You Afford Your Gray Divorce?

LISTEN NOW: Later-in-life divorces, dubbed "gray divorce" are on the rise and can be costly especially for women.
Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Interview Transcript:

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.

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Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?

Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs. 

And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are. 

Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?

Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.

Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.

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Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Dawn’s experience spans more that 25 years providing wealth management, financial planning and corporate finance solutions for clients. As an MBA, CPA, Certified Financial Planner (CFP®), and a Certified Divorce Financial Analyst (CDFA®), she is uniquely qualified to understand the challenges and financial needs of clients from executives to entrepreneurs, as well as single breadwinner parents. Dawn is a weekly contributor to WTOP radio.