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Trends and considerations in Gray Divorce

MI_GREY-DIVORCE_info_v8_OUTLINED-1By Jennifer Payseno, family law attorney at McKinley Irvin

Although the overall divorce rate has declined over the last 20 years, the rate of Gray Divorce – divorce between spouses 50 and older – has doubled. In addition, people 50 and older who have been married more than once are 2.5 times more likely to divorce.

Many factors are causing Gray Divorce including: waiting until after children are grown, financial considerations, “empty nest” syndrome, and developing new interests/lifestyles, among others.          

Those going through or considering a Gray Divorce need to examine retirement savings, insurance, Social Security, and estate planning. In all divorces, but especially in Gray Divorce, it’s important to protect beneficiary interests, insurance coverage, and financial accounts while the divorce is pending. For these items, the court will often enter restraints to protect both parties until the divorce is complete.

Retirement

Spouses in a Gray Divorce have fewer working years left to contribute to separate retirement savings and less time to recover from any depletion of retirement accounts. Both spouses may have to delay retirement or adjust their standard of living to either contribute more to retirement savings now or to live on less later. Early withdrawals from retirement funds can also result in penalties and fees for those younger than 59½ as well as potential increased taxes and delays in retirement.

Social Security

Social Security rules are complex, and a Gray Divorce or later remarriage can affect benefits. Although Social Security benefits can’t be divided in a divorce, many may qualify for benefits based on their spouse’s earning history. There are many rules you must meet in order to qualify for benefits based upon a former spouse’s record that older divorcees should familiarize themselves with.

Insurance and health

Once divorced, spouses can’t remain on each other’s health insurance plans. Medicare may be an option for those who qualify, but the cost of health insurance can be a major consideration in a Gray Divorce, especially for a stay-at-home spouse who may be facing purchasing private insurance. Some couples may consider a legal separation instead of a divorce in order to maintain shared health insurance. Long-term care costs, such as nursing home care, should also be considered as those costs can significantly deplete assets. In addition, if competency is a concern, consider whether a guardian ad litem, someone who represents that party’s interests, should be appointed.

Life insurance is another consideration for spouses in a Gray Divorce. When there’s an award of spousal maintenance, it’s common to secure that award with a life insurance policy naming the receiving spouse as beneficiary in case the paying spouse dies first.

Estate planning

Failing to update an estate plan during a divorce, means the current spouse may inherit everything. In addition to updating this plan, it’s important to update healthcare directives, powers of attorney, and beneficiary designations to ensure that your wishes are followed.

If you are considering a Gray Divorce, you are not alone. You should review your finances, property, and debts and meet with an experienced family law attorney, an accountant, and possibly a financial planner to help determine how to best protect yourself and your future.

Copyright 2015, Rita R. Robison, Consumer Specialist

Comments

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Tom Sightings

Some excellent points on a topic that should be talked about more. As a person who has gone through the Gray Divorce, I can add one more to the list of reasons: you're finally fed up with each other! In any case, Payseno is certainly right about one thing -- you certainly have to adjust your standard of living.

Rita

Hi Tom,

Yes, Gray Divorce certainly does change one's life.

Jennifer Payseno was going to send me this article in December, but she got busy with a case. It's good to have it in January, in light of my recent post on January being "divorce month," with a one-third increase in filings for divorce.

Rita

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