As you reach your fifties, divorce becomes another issue to be concerned about, and with good reason. For high-net-worth couples, financial pain is a significant part of calling it quits, as they have decades’ worth of collected assets and commingled accounts.
However, couples also need to consider the negative impact divorce can leave on their mental health. This is because divorce is associated with anxiety, depression, lack of confidence, social isolation, and a high risk of alcohol abuse. If you’re thinking about getting a divorce later in life or are already going through one, it’s advisable to examine all potential implications.
There is a considerable power imbalance in many high-net-worth couples whose marriage was strong for decades. A divorce can take a heavy toll on the financial situation of the partner who hasn’t been generating most of the income in the family.
For instance, a wife who hasn’t been working because she chose to be a stay-at-home mom while her husband was the one earning money to support everyone will most likely stop benefiting from the same financial comfort after the divorce. Because she didn’t work during the marriage, she will usually be entitled to less money and fewer assets, affecting her quality of life.
Usually, power-play occurs in the following situations:
- one partner has a job/ owns a high-profile business, but the other is unemployed
- one spouse earns substantially more than the other
- one partner is a stay-at-home mom or dad
- or one spouse comes from old money
A stable marriage is bound to help partners build and maintain wealth, which they and their children will enjoy freely. However, divorce is expensive since assets such as valuables, money, financial investments, and debt accumulated during the marriage will be divided between the former spouses. It is worth noting that divorcing spouses usually need a 30% increase in income to maintain the same living standard they had before the divorce.
In general, women’s financial situation becomes more challenging after the divorce. The financial burden is most significant during the first year after separation and ranges depending on factors such as:
- how much money the woman brought to the overall family income before the divorce
- whether or not she produced income during the marriage
- the ability and willingness of her ex-husband to provide child support payments
Alarmingly, roughly 1 in 5 women experience poverty following a divorce, meaning they have to make ends meet with less than $13,000 per year. Furthermore, 3 out of 4 divorced mothers whose ex-husbands were ordered to pay child support don’t receive full payment.
Prenuptial and postnuptial agreements are another stress factor that comes into play in high-net-worth marriages, especially in the case of women, as they are usually the partner who has to sign one. Such documents can take away significant financial rights for one of the ex-spouses after a divorce while providing security for the partner that held most of the assets during the marriage.
In contrast to the often devastating ways divorce affects women, men experience a 10% to 40% drop in their standard of living. This is because payments such as child support, a separate home or apartment, and the potential loss of their ex-wife’s income add up.
Nevertheless, men who provided less than 80% of a family’s income before the divorce suffer the most after the separation. On the other hand, those who contributed over 80% of a family’s income don’t experience significant financial loss – on the contrary, they may even improve their financial situation.
To comprehend the extent to which men often have more to win following a divorce, you should keep in mind that women lose about 40% of their pre-divorce income in the year of divorce. In comparison, their ex-husbands might experience moderate gains of approximately 5%.
To make matters worse, divorce proceedings by themselves can entail a serious financial burden. The cost of a divorce varies from as little as $8,500 to over $100,000, depending on how significant the assets are, or if the process is heavily contested. However, issues are more complex when the divorce involves high-net-worth partners, where legal fees can be over $50,000 or even $100,000.
Divorce decreases household net worth significantly. Some effective and practical solutions that are meant to help you protect yourself financially, whether as a woman or as a man, in a divorce are:
- immediately establish the divorce legally, in writing, as this is the only way you can protect the money you make after deciding to get a divorce
- get a copy of your credit report and monitor the activity on your commingled assets and funds during the marriage
- separate debt to protect your assets, as you will still be liable for any debt your spouse accumulates on joint accounts; you should ideally leave your marriage with no debt or only with the debt that is yours
- move your contribution to the joint accounts balances to a separate account since you should ensure that any income from employment or other direct deposits are going to be deposited into your new account
- go through your assets by setting aside any feelings of guilt, as doing so will help you keep a clear mind and allow you to defend what is yours
- enroll the help of financial and legal advisors to make sure there are no loose ends in sight
Getting accustomed to the new reality after a divorce can be extremely challenging and overwhelming, particularly if you were married to your partner for decades. You may feel as if your whole life was turned upside down. Most people will inevitably go through a grieving process, as described by Dr. Elisabeth Kubler-Ross. This grieving process entails five stages, namely:
When someone experiences this grieving process as part of overcoming their divorce, each step has beneficial purposes and leads to emotional healing. Nevertheless, according to a Psychological Medicine medical journal, some people may become vulnerable as far as mental health is concerned, developing anxiety, lack of confidence, depression, or numbing their emotional pain with excessive amounts of alcohol.
People who have recently gotten through a divorce may also isolate themselves from their families and friends, as they need time to process their new emotions and adjust to their partner’s absence. Frequently, isolation is a symptom of depression, a serious mental health condition that requires treatment. Left untreated, depression tends to worsen in most people, especially those who have to deal with emotional pain.
According to a study from Clinical Psychological Science, a medical journal of the Association for Psychological Science, divorce is correlated with a high risk for depression, but only in people already struggling with this mental health condition. The study found that 60% of the individuals who had depression and went through a divorce experienced a serious depressive episode due to separation. Only 10% of the people who divorced, but had no history of depression, ended up having a depressive episode afterward.
If you are a recently divorced person, you might have difficulties accepting your new reality. We encourage you to reach out and seek help from professionals such as counselors, therapists, and psychologists. While you may doubt they can help you navigate the situation, you may be surprised how effective the coping mechanisms they will teach you can be.
Sean M. Cleary is the owner and founder of The Law Offices of Sean M. Cleary and specializes in numerous practice areas, including high-net-worth divorce. His law firm is located in Miami, Florida.