According to various statistics, grey divorce is becoming increasingly common in the United States. The term “grey divorce” refers to the separation of married couples who are at a relatively advanced age. Generally, these individuals are over the age of 50. One study found that divorce rates for those 65 and over have tripled within the last 25 years. Divorce attorneys around the United States are undoubtedly aware of this phenomenon, as they are probably dealing with more of these older clients than ever before. In many ways, grey divorces are nothing special. They follow the same basic rules and result in similar outcomes. In other ways, these divorces require a unique approach, especially when it comes to financial matters.
Grey Divorce and Retirement
When people of this particular age get divorced, retirement is obviously a factor to consider. During the process of property division, spouses might be extremely concerned about their retirement funds, especially if they are no longer working. A mistake here can result in financial ruin as spouses approach their twilight years. IRAs like a 401(k) plan, a pension, and 457/403(b) accounts will need to be divided. When these accounts are divided, it can be easy to trigger taxable transactions. Couples may be able to avoid this by obtaining a qualified domestic relations order when dividing pensions and 401(k) plans.
Even if couples are still working and retirement is a long way off, things can still get quite complicated. Older individuals are more likely to earn higher incomes. In addition, they are likely to hold senior positions in companies, and these positions might come with significant benefits. These benefits may need to be taken into account during a gray divorce, even though they do not technically “count” as marital assets. Finally, these types of jobs may result in a spouse having more than one retirement account, further complicating matters.
Older Couples Tend to Have More Assets
It is also important to understand that older couples tend to have more assets. Not only that, but these assets are often of considerable value. Consider some of the biggest real estate markets in the United States, and how much they have skyrocketed over the last few decades. A couple who purchased a family home for a few hundred thousand dollars in 1980 may be dealing with a multi-million-dollar piece of real estate when they divorce in the modern era. This can all complicate divorces considerably.
Health Insurance
Another important consideration is health insurance. If couples are not yet 65, they will not qualify for Medicare and may have been relying on coverage from their spouse’s healthcare coverage through their employer. This requires spouses to suddenly plan for new healthcare coverage as they approach the end of their marriage.
Estate Planning
Couples must also re-evaluate their estate plans after going through a grey divorce. This might not be an issue for younger couples, but elderly individuals need to immediately draw up new documents and remove their former spouse from wills and trusts. At this advanced age, it is impossible to tell what will happen even days after the divorce is finalized.
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