In my wealth-management practice (Bridge Financial Strategies), I work with a lot of “G2s.” As a CPA, a CERTIFIED FINANCIAL PLANNER^® professional, and a Certified Divorce Financial Analyst^® professional who helps women with the financial side of divorce, I periodically work with them as well. And so might you.

Which begs the question you’ve likely been asking since you read the headline of this article:

What the heck is a “G2”?

This is financial-advisor-speak for “2^nd Generation.” As in, “second generation of wealth.”

Aha.

Now you’ll see how the pieces start to fall into place. For the purposes of this article, a “G2 divorcee” is either 1) a woman whose parents (the “G1s”) created substantial wealth, which she is now a part of, or 2) a woman who married a man whose parents created substantial wealth.

(“Divorcee” is technically incorrect here, since we’re referring to a woman who isn’t yet divorced. But it’s a convenient shorthand.)

I’ll quickly review the legal ramifications of a G2 divorce, because I certainly don’t need to teach you anything about the law! But then I’ll quickly delve into the financial side of a G2 divorce—and you’d be well-advised to pay attention, because the stakes are high, and the pitfalls are deep.

A complex union

When there’s a lot of pre-existing wealth before the marriage, there’s likely going to be—you guessed it—a prenup. So that’s the end of the story, right? A prenup is carved in stone. They always hold up. They can’t ever be broken. They’re never signed under any kind of duress.

Yeah, I’m laughing, too.

But consider this: What if the couple had married in New York, and now are divorcing in Arizona? Arizona is a community-property state; New York isn’t. If any assets weren’t specifically addressed in that New York prenup, they’ll be decided per Arizona law.

Again, this is legal stuff. Your court, so to speak. Now let’s shift to mine.

Intermingled assets

If Mom and Dad (of either spouse) created the initial wealth, say via a business or real-estate assets—it’s highly likely that their kids have some ownership of these assets. It’s not like “Mary owns X percent and John owns Y percent.” Rather, the assets would be more likely to be held inside a family limited partnership or other entity. And these entities are typically constructed such that one member of the family cannot compel the partnership to liquidate assets or make distributions, even in the case of divorce. Family limited partnerships are also hard to value, since the ownership can be discounted due to lack of marketability, minority interest, or lack of control.

And consider this: If money comes into that partnership from marital funds, or went to marital accounts over the course of the marriage, then some pretty complex separate-property tracing would be required.

But here’s the biggest issue in these G2 divorces: Lifestyle analysis. If there’s a prenup, then the “out spouse” won’t end up with half of the wealth they’re used to—and now need to make a case to preserve a reasonable semblance of the life they had led while married, in terms of house, vacation, car, social activities, and so on.

In my day-to-day practice, the woman is typically the “out spouse,” and she’s the one I’m helping to assemble a case to preserve her lifestyle. But if she’s a G2, and it’s her family that’s the G1, then the husband is the “out spouse,” and my task will shift to analyzing his AFI, and looking for any weaknesses in his side’s proposed settlement.

Fighting for your (professional) life

Not to be too dramatic, but you can be guaranteed that a woman with this kind of wherewithal, in a financial situation with so many intermingled moving parts, will not just sit idly by if she feels like her legal team didn’t do 100-percent right by her on the financial side of the divorce. There is a lot at stake for her. You do not want a case like this coming back to bite you because you didn’t engage someone like, well, me, during the case. Does the phrase “Hell hath no fury” ring a bell?

Contact me today. Let me help you with that G2—and all of your cases. Starting with the AFI. You’d be surprised to learn just how much upside value I can provide.-

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