For wealthy individuals who are near or at retirement, divorce can be a complex affair, as they would have accumulated more assets during the course of a marriage, explains Mary Ellen Garrett of Merrill Lynch.
It was reported last month that actor and comedian
John Cleese - famed for Monty Python and the irascible character, Basil Fawlty - has sold another portion of his prized art collection to fund an
$18.6 million divorce settlement dating back to 2009.
The news follows recent findings that the rate of
divorce in the US nearly tripled from two to five per 1,000 among those over
the age of 65 between 1990 and 2010.
It is also a reminder that, for wealthy individuals
who are near or at retirement, divorce can be a particularly complex affair
because they would have accumulated more assets during the course of a
marriage. The issue is also important because of the need for
individuals to balance post-divorce financial obligations while, in many cases,
supporting other family members too.
Indeed, employment and earnings are protective against
divorce, but how these factors operate for older adults who are typically
retired and relying on a fixed income is unclear, wrote Susan Brown and I-Fen
Lin, authors of the above-mentioned report, The Gray Divorce Revolution: Rising
Divorce among Middle-aged and Older Adults.
With those considerations in mind, Mary Ellen Garrett,
senior vice president of investments at Merrill Lynch, recently spoke to Family Wealth Report about the rise of so-called “gray divorces” among wealthy
clients and why they can be particularly complex to resolve.
“There are many costs involved and usually that’s the
key issue in most divorces because it’s a shock,” Garrett said. “We’ve seen
cases where some decide it’s not worth it when they find out what it’s going to
cost. In a gray divorce, assets will have built up over time and they can
include real estate, retirement plans and investment portfolios, among other
Garrett’s advice is to effectively “know what you
have” by working with coordinated teams of legal, tax and financial
“It’s always good to seek counsel, have things done in
writing and minimize expenses by being amicable and communicative with your
spouse as possible,” she
“Be involved in the business of your marriage from the
beginning. I think that’s good advice for people who are just starting out as
well as for those who are well into their fifties and sixties and especially approaching retirement.”
And while sharing responsibilities is of course an
important feature of marriage, one must not be “completely blind” as to what
the other spouse is doing, Garrett added.
“Many of us are trained in the prospect of helping
people when it comes to whatever life circumstances they’re faced with. But I
believe the co-ordination effort of legal, tax and financial is very important
- that combined effort. Some advisors have
the designation of ‘divorce specialist’, which offers some additional expertise
in this area. We’re seeing that more and more,” Garrett said, speaking
as a senior advisor herself.