Gray Divorce: Divorcing when you are over 50

The “gray divorce,” the term for a divorce involving a couple past age 50, is beginning to gain traction as more Baby Boomers seek Family Court intervention.  According to a Bowling Green University study, one in four Americans going through divorce is over 50. The study also said that the divorce rate for people 50 and older doubled from 1990 to 2010.

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For couples older than 50, there are a number of somewhat unique circumstances that must be considered.  Although the law is not expressly different, and at a very basic level the issues are no different – you still must divide assets, retirement, debts, and consider spousal support – the implications to individuals who are nearing retirement (or already retired) can be significant.

One obvious concern is that splitting up retirement (pensions, 401Ks and IRAs) in gray divorces has a more immediate impact.  When a couple has planned their retirement based upon one shared household and shared expenses for the couple together, splitting that up and dividing it roughly equally can mean that neither party will enjoy the same standard of living.  Hopefully, the parties have saved enough that divorce is not detrimental to their lifestyle, but many couples will have to make changes.

Another consideration is Social Security benefits.  Although Social Security is not an asset to be divided in divorce, there are government rules on when to claim, amounts that may be expected, and whether a non-working spouse can claim benefits based upon the working spouse’s lifetime contributions.  Medicare and private insurance policies can also be affected by a divorce at a time in life when healthcare premiums often become more burdensome.

Moreover, if one or both spouses in a gray divorce own a business, the division of what could be a long-standing (and long-growing) community asset may be complex and contentious, especially if retirement or asset sales loom.  Creative options for dividing a business under such circumstances may include continuing to jointly own the business until sale and then dividing the proceeds.

All couples should pay special attention when it comes to finances in divorces, but couples in gray divorces must be especially careful to plan ahead.

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