The divorce rate in the United States is declining for every single age group except individuals over 50 known as the “Gray Divorce”. The number of individuals divorcing after the age of fifty has doubled during the past 20 years as life expectancy grows and the stigma attached to ending a marriage fades. This article will provide a broad overview of the realities that divorcing couples after age 50 must face.
Sorting Out the Past
Couples divorcing after age 50 can face some very difficult choices when it comes time to divide up their accumulated property and equity. A long life spent together often results in numerous financial and physical holdings which need to be considered.
The primary difference in shared property between couples in their 50s and couples in their 30s is simple- volume. An additional twenty five years of marriage is a long time, and in that time couples tend to accumulate assets during the marriage such as a home, business, retirement accounts and artwork that they would not even have considered at a younger age. This accumulation can lead to a feeling of sticker-shock when the time comes to agree to a divorce settlement. It is also more likely that couples divorcing in their 50s have spent much more time as a married couple than they did as an adult single individual. Unlike a divorce within the first few years of marriage, the majority of assets in a late-life divorce are likely to be marital property with each party holding an equal claim.
When a couple divorces after age 50, the family home is often a much bigger issue than it would be for a younger couple. While couples in their 20s are likely renters or have newly moved into a starter home, couples after age 50 tend to be homeowners, many of whom have paid off or nearly paid off their entire mortgage. Further, couples who have raised a family or have older children likely own a larger and more spacious house than younger couples who have not had any children. This makes the family home an extremely valuable asset which can contribute greatly to a divorcing couple’s ability to move on. However, due to the deep emotional attachments people form to their homes after a prolonged period of residence, it can also serve as a point of contention and liability.
Thus, divorces late in life can lead to bitter disputes over who gets to keep the family home. Whether it is due to fond memories, wishes to maintain stability for older children, or simply stubbornness, divorcing parties will sometimes fight to keep the home past the point of rationality. The upkeep and taxes on a family home can be an enormous burden on a single income. It is important to attempt to keep emotion at arms length and wisely and reasonably assess your current living situation. If your children have moved on to college or careers of their own, do you really need a four bedroom with a large backyard and two and one-half bath home anymore? How much of your financial stability are you willing to risk by attempting to barter for the sake of sentimental value? Perhaps most importantly, what better uses could you put the proceeds from the sale of your home towards as you move onto the next stage in your life? Are you better off investing the money for your retirement years?
If you are the party who is leaving the house and your spouse stays behind, be aware that you are still obligated for any debt remaining on the note and mortgage if you were part of the original financing. This is an important issue to address when working out a settlement.
It is also more likely that older divorcees will have established 401(k), IRAs or employer sponsored retirement assets. While the actual percentage of the retirement assets that each spouse receives will vary depending on the situation, it is very likely they will be divided up. In order to avoid tax repercussions when dividing retirement assets outright, you will need a court ordered qualified domestic relations order (“QDRO”). The QDRO will instruct the administrator of the plans to pay non-participant, alternate payee spouse the designated share, at which point the spouse can deposit the amount into a different tax-sheltered account.
Social Security Benefits
For divorcees in their 60s, social security becomes a very important issue in that you may be entitled to part of your ex-spouse Social Security Benefits. Starting at age 62, ex-spouses are entitled to half of their ex’s benefit as long as they were: (1) married for at least 10 years; and, (2) did not remarry when they start collecting the benefit. If your former spouse dies you may be eligible to receive survivor benefits of 100% of your former spouse’s Social Security Benefits. The basic requirement are: (1) your marriage lasted at least 10 years; (2) you are at least 60 years old; and, (3) you are not entitled to retirement benefits equal or greater than that of your former spouse’s benefits.
Facing a New Present
Divorce represents a radical change for everyone, but especially divorcees who have become accustomed to being married after ten, twenty, or even thirty years. There are several new realities which can affect your life in addition to simply separating from your spouse.
Childcare and Custody
When a couple divorces after age 50, it is hard to make accurate guesses about their childcare scenario. They could have no children or half a dozen, children still in middle or high school or off working in careers of their own. The custodial arrangement the couple comes to will vary depending on the individual relationships with and needs of the children. However, it is important to remember that regardless of your age, you remain financially responsible for your unemancipated children.
It is important to be aware of your own financial situation when considering the needs of your children. Often in a divorce, especially in scenarios where there are older children more aware of the proceedings, parents will over extend themselves by attempting to support adult children or by offering more than is required. It is a wonderful thing to support your children in whatever ways you are able, but you should be careful not to do so at the expense of your own security and retirement.
It is also important not to overlook the effect that a divorce can have on older children. Adult children of divorce can have unexpectedly intense psychological reactions to their parents splitting up. It can challenge the child’s perception of family and even make him or her question the strength and durability of their own relationships. Divorcees with adult children will often lean on their children for emotional support as they go through a difficult time, and it is important to remember that the child may be in need of support themselves as one of the foundational constants in their lives disappears.
As in all divorces, there is a possibility that the Court may allow alimony to be paid by one ex-spouse to the other. Alimony is a payment required by a divorce or separation agreement which is paid to a spouse or ex-spouse from whom you are legally separated or divorced and do not file a joint tax return. The primary factor court’s consider in determining alimony is the relative earnings, earning capacities of the parties and what is necessary to be paid to the spouse for a certain duration of time to “rehabilitate” himself/herself financially post divorce.
For divorcing couples over 50, it is important to note that a court will not enter a support order which includes saving for retirement as a reasonable expense. Generally, ex-spouses are not entitled to additional alimony to assist them in accumulating funds for future expenses.
No matter what age you are, it is a simple fact that it is easier to maintain a lifestyle with two incomes instead of one. A common mistake divorcees make is failing to adjust their budgets accordingly. Maintaining two households on the same income which used to maintain only one is a big adjustment, and it’s important to plan ahead so you don’t find yourself falling behind on payments and bills.
One of the most important new costs that divorcees after age 50 need to consider is health insurance. Many married people are covered under their spouse’s health insurance policy. If you divorce at 55, that insurance is suddenly not available any longer, and Medicare is still ten years away. You will be obligated to obtain your own insurance either through your employer, the Affordable Care Act, or continue your ex’s existing coverage for up to 36 months through COBRA- but be aware that the cost will likely substantially increase.
Where to Put Your Assets
This article is not an investment guide, but there is a recurring theme among older divorces that it is important to be wary of. Couples who divorce in their 50s tend to become much more conservative and risk averse in investing their money. There is nothing wrong with proceeding with caution when trying to put your money to work, but be careful not to fall into the too-common trap of being so conservative your gains don’t keep up with inflation. This becomes especially apparent with divorcees who insist on keeping their assets in cash, which is a certain way to see your value drop with no hope of an increase.
Planning for the Future
Even though it may not feel like it in the middle of the process, you have your whole life ahead of you after a divorce. Still, it is important to move quickly and decisively to get your affairs in order once the decision to divorce has been made. It is likely that all of your estate planning to date has been focused on or around your spouse. Now that you are getting divorced it is time to re-evaluate your priorities and your plans for the future.
The typical Will of a married couple will leave the entire estate to the surviving spouse, and then to the children only after the death of the surviving spouse. Similarly, spouses will generally name each other as their Agent for their Power of Attorney. Obviously, this set up is no longer ideal once the marriage is over. It is important to act quickly to name your new beneficiaries and Agent to avoid messy complications in the event of an unfortunate accident or illness.
You may also wish to work with an attorney to draft a Living Will, which outlines your wishes for health care in the event that you are incapacitated. While many couples in long lasting marriages will have discussed these issues with their spouse, it is far less likely that they have been addressed with children or other relatives who may be in charge of making your healthcare decisions once your spouse is no longer around.
An experienced Philadelphia family law attorney should be consulted for all questions or concerns about an ongoing or upcoming divorce. It is also important to consult an experienced estate planning attorney in Philadelphia PA when making any decisions about your Power of Attorney or Will. Please feel free to contact this office and meet with one of our experienced Philadelphia PA Divorce Attorneys about any such questions or concerns.