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It’s no surprise that your likelihood of divorce is somewhat based on your relationship with money.
Money is the leading cause of stress in a relationship, according to data from Northwestern Mutual’s 2018 Planning & Progress Study. The survey of over 2,000 adults found that 41% of people said financial anxiety impacts their relationship with a spouse or partner.
And the more money you have, the more problems you face (or so said the late rapper Notorious B.I.G.).
Economic growth rose more than expected in the first quarter of the year, thanks to continuing strength in the labor market. As a result, incomes generally are higher across the board.
That, in turn, has meant more couples are experiencing trouble, according to the American Academy of Matrimonial Lawyers. Divorces tend to pick up rather than decrease during an economic boom, the organization said.
“It’s easier to swallow when your net worth is higher,” said Michael Stutman, a past president of the New York Chapter of the AAML and a founding partner of the Manhattan-based matrimonial law firm of Stutman Stutman & Lichtenstein. Stutman said he has also seen a rise in high-net-worth divorce filings.
“Essentially, people feel there’s more money left over after they dissolve their marriage and split up the spoils,” he said.
By an almost 2-to-1 margin, lawyers polled by the academy said they typically only see a decline in the number of divorces during national economic downturns. When forced to weigh damaged marriages against tight budgets and uncertain financial outlooks, many spouses seem more willing to try and wait it out, the AAML found.
It’s easier to write a check for $5 million when you have $10 million than it is to write a check for $50 when you have for $100.
partner at Stutman Stutman & Lichtenstein
“It’s easier to write a check for $5 million when you have $10 million than it is to write a check for $50 when you have for $100,” Stutman said.
However, splitting a household in two is hard enough. Divisions get even trickier when there are complicated assets to value and distribute — such as art, wine and antiques or silverware. “There is a risk with any type of collectible for which there is not a ready exchange,” Stutman said.
That’s when turning to a qualified professional is key, he added. “If you are not confident in your own view of what things are worth, then you need to rely on the opinion of people who are trained.”
In addition, division of property is typically a non-taxable event. The same now goes for alimony payments, which are no longer tax-deductible for the payor and considered taxable income for the payee under the Tax Cuts and Jobs Act.
One divorce calculator shows that there could be less money to go around under the new tax rules — which may put more pressure on the valuations of illiquid assets.
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