By Jim Warren
At Warren Family Law, we’ve been helping people navigate the emotional journey of divorce for more than 30 years. As you can imagine, over that time, we have seen virtually every situation, from those with children to childless couples, to double-income households to business owners, to young, middle-aged, and older couples.
Today, let’s talk about how getting divorced at the age of 50 or older, often referred to in the media as “gray divorce,” which can hold a different set of challenges when compared to younger couples divorcing. While divorcing can take an emotional toll at any age, gray divorce does present a different set of complexities to tackle with your divorce attorney (and also your accountant and financial planner, as applicable).
Couples in a gray divorce situation often either have college-aged children or grown adult children. A North Carolina judge cannot compel you to provide for or pay a portion of college expenses unless you previously agreed to do so or by consent order.
With grown children, there are estate planning considerations to address. Specifically, you should have wills or trusts properly address your wishes for your asset distribution upon your death. Many times, those who fail to properly plan see a percentage or all of their hard-earned assets bequeathed to an ex-spouse.
Many older couples have achieved some degree of financial success and have adjusted their standard of living to earning much more money in their forties and fifties than they did in their younger days. The simple fact of divorce is that your living expenses are much harder to meet without income arriving from your spouse. Thus, many people, whether they are the supporting spouse facing the realities of life alone while paying alimony, or the dependent spouse living on a percentage of what was a much higher number, need to plan on adjusting their standard of living downward—and considerably so—for the first time in many years.
This is a particularly thorny subject currently with gray divorce, as the cost of health coverage has skyrocketed for nearly an entire generation, both before and after the advent of the Affordable Care Act.
The cost of health insurance can be especially jarring if a spouse had been covered previously under an employer-based plan granted by their spouse’s employment. Going into the open market to purchase insurance can be a sum greater than $250 per month for some, closer to $1000 per month or more if you are seeking coverage with children.
For many families, possessing a trove of credit cards and loans, issued by their banks, their favorite stores, and of course those obtained from the near-daily mail offers, is a fact of life. It’s hard after a while to even remember whose account is in whose name, as well as which person is just an authorized signer.
The reality of this debt, post-divorce, comes into tight focus and can cause great financial pain, especially when you haven’t taken the time to audit the account ownership of all of your debt obligations.
This area is where the accountants and financial planners show their value in divorce planning. Older couples typically have more complex finances—lots of equity in their primary residence, considerable retirement accounts, brokerage accounts, savings and money market accounts at the bank, annuities, and vacation and rental properties. The decisions you make with regard to each of these asset types can have a positive outcome or an adverse effect on your tax situation—there is rarely neutral ground, so it’s best to plan ahead and see the outcomes of certain distribution scenarios before you act.
This is definitely a factor for those divorcing in their sixties. Many couples have one spouse as a primary breadwinner, while the other spouse spends years doing unpaid management of the home and raising children.
The dependent spouse that’s been out of the work force or only worked part time due to the arrangements of the marriage may be entitled to receive one-half of what the supporting spouse’s Social Security benefits are. It doesn’t reduce what the other receives. For instance, my wife has worked since she was 16 years old. She can draw her Social Security benefits or half of what I receive, whichever is greater. This is true for any couple who has been married at least 10 years. Again, what she gets doesn’t reduce what I receive.
In conclusion, gray divorce can take a real toll on people. I’ve had middle-aged an elderly clients going through a divorce tell me that what’s happening feels like a catastrophic financial event. While you can’t plan your way out of every consequence of divorcing later in life, you can certainly minimize the financial impact by working closely with your family lawyer, estate planning attorney, financial planner, and accountant.
At Warren Family Law, we’ve helped many clients, just like you, navigate the process of divorcing, no matter what time of life. Gray divorce is difficult, but we have the experience you can count on to move on with your life and minimize the consequences. Contact us today to get started.