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Dear Quentin,
My husband and I have been married for 38 years. He “retired” in 1992 at age 50. His plan was to start an investment advisory firm with my help.
I was 43 at the time and ended up quitting my job as a database programmer in order to be his IT person and “back office.” (His salary was $75,000 at the time, and mine was $33,000.) We started out with three friends as clients as a test run, and that showed him that he wasn’t cut out to manage money for other people.
“Plan B” was just to manage our money, for which he also needed my help. He was used to being “the boss” and always needed an administrative assistant. For 29 years, I have been his research analyst, trade executioner, report producer, medical caregiver (as his health has deteriorated), cook and housekeeper, etc.
In other words, I have done everything needed to run the household and his “business” in order to keep him free to do nothing but make investment decisions (which I have always left up to him). He is the most computer-illiterate person I know. If he can’t just “click” on a link, he has no clue how to do anything.
“‘Living together 24/7 for the past 29 years has had its ups and downs, lately mostly downs.’”
Living together 24/7 for the past 29 years has had its ups and downs, lately mostly downs. He keeps talking about divorce, as I seem unable to fulfill all of his needs. We have approximately $706,000 in investment assets, $472,000 of which are in his Roth IRA.
My Roth IRA is approximately $168,000. Most of his investment activity centers around his IRA, as its size makes it more flexible. We have about $66,000 in a joint brokerage account. Our “job” for the past 29 years has been strictly our investment activity. We have approximately $200,000 in equity in our home.
The problem is this: He seems to think that he’s entitled to ALL of his Roth IRA, plus half of our joint account, plus half the equity in our home, or $605,000, leaving about $301,000 for me. His reasoning is that his IRA belongs strictly to him and he made “more money” than I did when we were working, and also the fact that he has made all the investment decisions.
My reasoning is that 1. We’ve been married for 38 years. 2. I had no choice but to quit working and become his assistant. 3. He couldn’t have done any of it without my help. 4. I believe that anything either of us made, either during our working years or during our “investment” years, was marital income and should be split equally. 5. We have previously used funds from both IRAs to pay current bills and fund other joint accounts.
I did not have an IRA before our marriage. I maintain that everything should be split equally if we split up. He will insist on fighting me on that, which would only make the lawyers richer and give us less to split up if I am right. Please give me your opinion.
More Downs than Ups
Dear Ups and Downs,
How your assets are divided in the event of a divorce depends on a variety of factors, including whether you live in a community-property or equitable-division state, and/or the division between marital and separate property, and your contribution to the marriage in both a financial and non-financial capacity.
There’s only one aspect of your letter that I disagree with: “2. I had no choice but to quit working and become his assistant.” While your husband was unable to manage other people’s money — and I’ll leave it to you to decide whether he managed your money successfully — it’s better to make peace with the decision to give up your job.
The good news is that it’s not up to your husband. It’s not his way or the highway. From what you say, your contribution of time and labor was at the very least on par with that of your husband. As you say, anything earned during your marriage is generally considered marital property.
“How exactly the Roth is divided is subject to negotiations, and absent agreement, a judge would decide,” according to Farias Family Law in Massachusetts, which is an equitable-division state. In that case, the court will decide on how much of the spouse’s Roth IRA should be split.
“‘The good news is that it’s not up to your husband.’”
“The parties may divide the actual Roth account or they may instead offset its value with other assets,” the law firm says. “For example, the parties may agree that the account holder will keep the Roth, but the other party will receive a greater portion of the equity in the marital home.”
Also, because you contribute after-tax dollars into a Roth IRA, you are typically free to make tax- and penalty-free withdrawals after the age of 59½. Those tax considerations are taken into account when dividing assets (with 401(k)s, as you are likely aware, the money will be taxed upon withdrawal).
The “gray divorce” rate has, for better or for worse, doubled for adults 50 years and older in the U.S. and tripled for those 65 years and older, according to data from the Pew Research Center. People are living longer, more women are able to strike out and become financially independent, and the pandemic hasn’t helped.
“‘Make sure you have a financial plan post-divorce too.’”
MarketWatch columnist Angie O’Leary, who is the head of Wealth Planning at RBC Wealth Management-U.S., wrote about this phenomenon earlier this year, and outlined a rake of do’s and don’ts regarding taxes, life insurance, retirement assets, and how divorce can impact women differently from men.
“A qualified domestic relations order, or QDRO, is typically used to divide certain employer retirement and pension plans,” she writes. “A QDRO recognizes joint marital interest in the retirement assets, giving the ex-spouse a share of those assets.” And make sure you have a financial plan post-divorce too.
Given the length of your marriage and your contributions, and in the absence of a prenup, it seems hard to fathom a divorce court that would not divide your assets fairly and equitably. Keep your emotions out of the process. Hire a lawyer, compile all the financial statements, and share your state’s divorce laws with your husband.
The end result may be that you decide to divorce, or that you decide to reevaluate your marriage arrangement, and live separate lives and remain married. Going through a divorce at this point could be financially devastating. Whatever you ultimately decide to do, I wish you more ups than downs for the years ahead.
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
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More from Quentin Fottrell:
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• My mom had my grandfather sign a trust leaving millions of dollars to two grandkids, shunning everyone else
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• ‘Grandma recently passed away, leaving behind a 7-figure estate. Needless to say, things are getting messy’
