All Your Friends Are Doing It: Is Divorce Contagious?

divorce contagious

Is divorce contagious?

A lot of us have experienced it or at least witnessed it in some way. One neighbor or co-worker decides to get divorced and the next thing you know you’re the last married couple on the block.

Or maybe you’re not.

The point is, one month you might think that everyone is happily married and the next, divorce is spreading around you like a virus.

This actually makes sense. Groups of couples often meet and become friends because the kids go to the same schools or have other things in common. Similar income and wealth levels are also a factor in most friendships. As children grow and begin leaving the nest, the urge to “stay together for the kids” gives way to “I must take care of my own happiness.”

A group of families can very easily find themselves in this position all at the same time. Once the first couple calls it quits the remaining members of the group get a glimpse into just how divorces happen and what life looks like on the other side.

Is the grass really greener?

Fear of the unknown is a big reason why some people hesitate to get divorced. Will I be able to maintain my lifestyle? Will I have to go back to work even though I’ve stayed home with the kids for years? How will this affect my retirement? What about the house? The kids? What will my family think?

However, as friends or family navigate the divorce process and transition to life after, the process might seem less daunting. The shared experience serves to remove ambiguity. Suddenly the divorce process itself and life as a single person seem less frightening and a Divorce Bubble pops.

Come on! Answer the question.

Because there is a study about everything for everything you might be interested in an academic paper titled Breaking Up is Hard to Do, Unless Everyone Else is Doing it Too: Social Network Effects on Divorce in a Longitudinal Sample.

The title of the paper may lead you to assume findings are supportive of divorce contagion but we find other interesting data from the study including a possible suggestion on how to better a marriage. The abstract states the goal “to explore how social networks influence divorce and vice versa.”

“Divorce is a collective phenomenon that extends beyond those directly affected.” Friends and family may be called upon for emotional support during the process. In some cases, the still married couples are placed in the middle and asked to choose sides. Surprisingly the paper finds “attending to the health of friends’ marriages may serve to support and enhance the durability of one’s own relationship.”

However….

Data show clusters of divorce extending to two degrees of separation in a social network. In other words, a person’s tendency to divorce depends not just on a friend’s divorce status, but also extends to friends’ friends. A divorced friend or family member who lives hundreds of miles away may have as much influence on risk of divorce as one who lives next door.

According to the study “People who have a divorced friend are 270% more likely to divorce themselves.” Coupled with previous research concluding daughters of divorced parents are 70% more likely to divorce themselves I think we have our answer.

DIVORCE IS CONTAGIOUS!

 

wellspring divorce advisors

Wellspring Divorce Advisors helps individuals and couples address the financial aspects of divorce in a civilized, equitable, and efficient manner by providing expert divorce financial planning and advice. Contact us to find out how we can help you through this process.

Client Question: Can an IRA be transferred to or from my former spouse?

IRA

Great question.

YES. Many divorce settlements require the transfer of some amount of funds in an IRA account from one party to the other.

Here are our recommended steps for completing the transaction.

We suggest this process be started immediately. This way, you may be sure you have control of the assets you fought so hard for during the divorce process.

Open a new account.

In order receive the funds we suggest the transferee open a new IRA account in their individual name. If you already have an IRA account it can be used to receive the funds.

Prepare paperwork for transfer.

Some custodians require a simple letter of authorization signed by both parties and a copy of the divorce judgment to complete the transfer. Others require signature guarantees on the letter which must be obtained from a local bank. The letter should provide the source and destination account numbers. We suggest opening the new account from step one at the same custodian as the currently existing account. It will make the transfer process easier because the custodian remains the same.

Make sure you don’t….

No matter what you do… DO NOT take a distribution out of the IRA.  If you are under age 59 1/2, you will end up paying taxes and penalties on the distribution. The process we want you to complete is called a trustee to trustee transfer. It may help to contact the current custodian and simply tell them the transfer is pursuant to divorce and you would like to complete the transfer in this format.

Update your beneficiary designations.

An IRA passes to the named beneficiary if you should pass away. Make sure you have removed your former spouse if you do not want them to inherit your share of the assets.

If you follow these steps there should be no taxes or penalties on the transfer.

Let us help you.

Wellspring Divorce Advisors provides comprehensive post-divorce transition management services for our clients and can assist you with the transfer of IRA accounts pursuant to divorce settlements. Let us know if we can help in any way. We also offer long term financial advisory services through our sister companies.

 

wellspring divorce advisors

 

Wellspring Divorce Advisors helps individuals and couples address the financial aspects of divorce in a civilized, equitable, and efficient manner by providing expert divorce financial planning and advice. Contact us to find out how we can help you through this process.

 

Divorce Rates in America: Contributing factors and looking at demographics

divorce rates

Is the divorce rate REALLY 50%?

American media has long been interested in divorce rates among our population. Common, yet incorrect, knowledge is that 50% of marriages end in divorce.

There are two common data sets used to determine divorce rates. The American Census and the American Community Survey. The Census is taken every ten years and thus provides large scale data infrequently while the American Community Survey, performed by the same government entity, is done on smaller scale every year.

There are a few key points to understanding divorce rates

  1. If an individual has divorce once they are more likely to have a second marriage end in divorce. The more times one has been married the more likely they are to experience a divorce ending future marriages. This reality can skew data given the potential for one individual to be married and divorced 3 or 4 times during their lives.
  2. Both men and women between 21 and 40 are getting married later in life than ever in history. Divorce rates may ultimately remain the same for this generation but the divorces may have simply not happened yet because their marriages are still relatively new.
  3. Older generations are living longer, increasing the likelihood a marriage will end in divorce rather than widowhood. Wellspring Divorce Advisors refers to these late life divorces as Gray Divorce.

Add to these complications the differences in demographic subsets and it makes the actual divorce rate hard to determine. So where can we turn?

Wellspring Divorce Advisors recently came upon an interactive info-graphic at FlowingData showing Divorce Rates for Different Groups.  While no final determination is made by the data the interactive chart, based on American Community Survey and other data provides a pretty interesting overview of divorce rates based upon race, education, age and employment status. Check it out in the links above.

 

wellspring divorce advisors

 

Wellspring Divorce Advisors helps individuals and couples address the financial aspects of divorce in a civilized, equitable, and efficient manner by providing expert divorce financial planning and advice. Contact us to find out how we can help you through this process.

From Mediation to Litigation: A look at how much a divorce costs.

divorce costs

Let’s take a look.

If you’re wondering how much a divorce costs, you’re not alone. In fact, that is probably one of the first things people think of when they contemplate ending their marriage.

And for this question…we have a very concrete answer for you: It depends on the situation.

Yes, unfortunately each scenario is different. But that doesn’t mean that we can’t give you a better idea of what might make the difference between a reasonable and costly divorce.

  • Substantial or complicated assets may contribute to a higher cost.
  • If you own a small business and take liberties with deducting your personal expenses as business expenses on your taxes your divorce cost will be higher.
  • Significant separate property claims between you and your spouse could have an impact.
  • Unproductive and disrespectful discussions with your spouse can also drive the cost up.

Other issues.

In our experience the most expensive divorces are fought by two parties who HATE each other for one reason or another. Sadly, the legal system is structured in such a way that these two individuals are often more angry at the end of the process than they were at the outset. It also depends on the attorney’s hourly rate and if he or she is inclined to encourage a settlement. Hiring the most expensive attorney in town known for being a shark will increase your divorce cost.

How we can help.

Wellspring Divorce Advisors coaches clients to think of their potential divorce cost as a continuum from highest to lowest rather than absolute dollar terms.

Ranked below are your process options ranked highest to lowest in cost. We have seen litigation cases cost millions of dollars in fees and mediation cases with equivalent amounts of assets done for $15,000.

  1. Litigation
  2. Adversarial with Settlement
  3. Collaborative Divorce
  4. Mediation
  5. Pro-Per

Click here for a brief overview of your main options or call us for an overview and consultation to help you choose. Our experience has shown the engagement with Wellspring Divorce Advisors will reduce your overall cost significantly.

One more thing.

A failed mediation can easily land you in a litigation model and cost even more. Make sure you understand mediation before opting in. The model is often misunderstood and full of less than reputable professionals.

Retirement Accounts & Divorce: Why you need a QDRO

QDRO

QDRO: Qualified Domestic Relations Order

A Qualified Domestic Relations Order (QDRO) is the court order required to give notice to a retirement plan administrator that an Alternate Payee is entitled to a portion of the plan. Without a QDRO the plan administrator cannot legally make payments to the Alternate Payee.

Retirement plans such as 401(k)’s and defined benefit pension plans are often among the largest assets to be divided during the division of a martial estate. Many of these plans are governed by a set of federal laws known as the Employee Retirement Income Security Act of 1974 or ERISA. ERISA allows an Alternate Payee such as a former spouse to receive a portion of the employee’s benefits with a court order.

Who should draft my QDRO?

The drafting of a Qualified Domestic Relations Order is an important step in the divorce financial planning process and should be drafted by an attorney familiar with this subset of legal practice.

Financial planners have specific and far reaching knowledge of retirement plans and the underlying laws that govern them but are ill-equipped for drafting the actual Domestic Relations Orders as they are usually not attorneys.

Do I REALLY need an attorney?

For a QDRO to be valid and accepted by both the court and the plan administrator it must contain specific requirements under the law as well as be tailored to that specific plan. Retirement plans may even reject court certified orders that were not pre-approved by their own staff. For this reason it is necessary for a draft to be sent to the plan administrator for pre-approval prior to seeking court certification.

Wellspring Divorce Advisors suggests the qualified domestic relations order be drafted and pre-approved prior to finalizing the global financial agreements. We have seen many individuals still fighting to get their share of the retirement plans awarded to them years after settlement because the other party refuses to sign. See more on the QDRO Process here.