A 2017 Pew Research study found that the divorce rate has nearly doubled amongst U.S. adults above age 50. While divorce is already an emotionally draining process, when you add in the complexities of dividing assets and determining spousal support, both parties could be left in disarray.
What is Gray Divorce?
The term “Gray Divorce” is used when referring to the divorce of individuals over the age of 50 who have been in a long-term marriage. Because of the length of the marriage, these divorces can be more complex; however, working with a team of qualified professionals, including a wealth planner, can help you navigate the situation.
Start with a little financial prework.
It’s likely that you and your spouse have amassed a number of assets that will now be divided. One of the first things you should do is take inventory of all separate and joint accounts. This may include checking accounts, savings, and investment accounts, as well as other assets like real estate, insurance policies, businesses, or collectibles. Make note of all outstanding debt as well. Then, locate any wills, trusts, prenuptial agreements, or other documents that contain information that could affect your financial future.
Remember to confirm how each asset is titled. Property acquired prior to the marriage or after separation might not be a part of the divorce settlement whereas most assets acquired during marriage are subject to equitable distribution. This includes but is not limited to individual accounts like 401k plans, pension plans, and IRAs. There are special rules about dividing these assets to avoid standard withdrawal penalties.
Think about how your decisions will affect your future.
Looking towards the future, it’s important prioritize your individual financial goals. This includes thinking about how your age will affect your retirement timeline.
As you are making any decisions, think strategically. Educate yourself on the benefits of retaining ownership of certain marital assets. The marital home may assume a significant emotional value during the divorce; however, the ongoing expenses such as taxes, insurance, and maintenance are often forgotten. This could be detrimental to your finances and ownership of an investment account might be more beneficial.
It’s likely that your children are older and you aren’t concerned about child support, but consider the costs of any education expenses and tuition if you and your spouse are currently supporting your adult children in any way. If you want to leave a legacy or support your grandchildren in the future, then you will also need to put strategies in place to ensure that you can do so.
The bottom line.
Divorce is not easy, and the process can cause emotional turmoil. Furthermore, older adults and those facing “Gray Divorces” can have complex financial situations that require extra precautions. If you or someone you know is considering divorce, we have a Certified Divorce Financial Analyst®, Maura Copsey, on staff to assist. Connect with us today to learn more.