Wolfe Kobes Journal

How well are you prepared for adversity in your life?

 We try to live our lives in a meaningful way and prepare for the unexpected but how do we handle adversity when it strikes? When tragedy and hardships occur in our life we often turn to our faith, our loved ones and our friends for support and comfort. All of those are very important but we often don’t realize the importance of preparing in advance for those things until an event occurs.
It is much better to plan and prepare for those things that we know could happen because eventually some will happen. Some of the things that we can prepare for ahead of time is loss of health, loss of a job or loss of a spouse. It is estimated that 70% of individuals over 65 will need some form of long-term care during their remaining years but statistically 100% of us will die.

Most people try to prepare for some of those risks through life insurance and long-term care insurance but what about other unforeseen risks such as divorce. No one wants to think that their marriage could end in divorce but statistically almost half of all marriages do. And sometimes one spouse chooses that option regardless of whether the other spouse wants it or not.

I just finished getting my designation as a Certified Divorce Financial Analyst (CDFA). That allows me to assist a client and their attorney in helping to set expectations and discuss potential outcomes during a divorce.

 Some valuable things that I learned while getting this designation:

1.       When couples divorce often one spouse doesn’t know the full extent of the accumulated assets (or debt), where those assets are held, where bills are paid or when they are due, as well as other crucial financial information. It is extremely important that both spouses are involved and knowledgeable in all financial areas because things could change very quickly either due to an unexpected death or divorce. We strongly encourage both spouses to be involved in the finances and at the financial planning meetings that we do with our clients.

2.       50% of divorces are done “pro se” meaning the couple chooses to do it without the use of an attorney. Couples choose this option to keep expenses low or for various other reasons. Unfortunately, when a divorce is done this way costly mistakes can be made. For example, not considering the cost basis of a home, how tax consequences will factor in when dividing retirement assets vs. other assets, the present value of a pension or how to value a business.

3.       Divorce rates for “Gray Divorce” or people over 50 years old have been increasing and have doubled since 1990. Longer life expectancies have increased the likelihood that marriage will end in divorce rather than widowhood.

4.       Another statistic in “Gray Divorce” is that one in three divorces mention the word Facebook when filing for divorce. One third also mention online affairs.

5.       The rate of divorce is 2 ½ times higher for those in remarriages versus first marriage.

6.       Other factors that can contribute to divorce are:
a.       A spouse with a pre-existing condition can now have access to health care insurance.
b.      Cobra has been extended to 36 months for an ex-spouse in certain instances.
c.       Low-income couples can receive higher tax credits for insurance as single individuals.
d.      The spend down provision of Medicaid. Sometimes people divorce to avoid that.

As I considered writing this I didn’t want to focus on a depressing topic like divorce but I did want to get everyone thinking about what happens when life plans change unexpectedly and you have to go to plan B…..or plan C. The impact can be a little less stressful if we have planned and prepared for the unexpected as much as possible.

 "It’s not the load that breaks you down, it’s the way you carry it."  -  Lena Horne

 Live every day to the fullest,

Kurt, Jean & Molly

Why You Should Take a Fresh Look at Your Insurance Coverage