A gray divorce refers to the separation of people aged 50 or older. Because these couples have spent a significantly larger portion of their life together than younger spouses, a gray divorce could come with its specific set of challenges.
Baby boomers today are getting divorced at much higher rates than ever before. In the period from 1991 to 2008, the median divorce age increased for both men and women. While the national divorce rate in the US has been declining steadily, it has gone up for those aged 55 or older. In this age range, the divorce rate increased from five divorces per 1,000 marriages in 1979 to 15 divorces per 1,000 marriages in 2017.
The division of property and assets accumulated over the course of the marriage is one of the biggest challenges gray divorcees face.
If you’re about to separate from your spouse of several decades, you’ll need to keep a number of important property division issues in mind.
Dealing with the Family House
You’ll need to think about who will get the family house in the aftermath of the divorce proceedings. Consulting an attorney in the state that you live in will give you a better idea about how this type of division is going to take place.
It’s very common for both spouses to want the house, a fact that makes the gray divorce incredibly stressful. In such instances, the house could be sold to ensure an even split.
Alternatively, one of the spouses will get the house while the other will be compensated with an asset of an equal value. Such a property distribution will ensure the fairness of the divorce proceedings.
If possible, talk things through with your spouse before moving on to the court procedure. Reaching a mutually-beneficial agreement out of court is the fastest and most painless way to address the situation and get what you deserve after years of accumulating assets and property together.
A Reduction in Retirement Savings
The joint property you’ve accumulated over the course of the marriage does not consist solely of real estate. There will be retirement accounts and other assets you will have to consider to ensure your financial stability in the long run.
Pension plans IRAs and 401Ks rank among the most valuable retirement accounts you’ll have to sort through before finalizing the marriage dissolution.
In many states, retirement accounts are considered community property. This means they belong in equal amounts to the two individuals getting divorced. In such instances, retirement accounts are the subject of equitable distribution.
Whenever the accounts are established over the course of the marriage, the accumulated interests over the years are considered marital property.
Things aren’t as simple as doing a 50/50 split, however.
Future taxation on the distribution of the retirement savings should be calculated when making the decision about the split. Many retirement accounts consist of funds that have not been subjected to tax yet. Thus, the distribution will result in the payment of fees and charges you may be incapable of handling at the time being.
Consult a lawyer and if the distribution of retirement savings is the right way to go, you will have to follow the legal procedure in your state. A qualified domestic relations order will be needed, to notify the authorities that the distribution is the result of a divorce and not an actual withdrawal.
Will You Get to Keep Your Separate Property?
The term separate property refers to real estate and assets acquired by either spouse before the marriage.
You are entitled to your separate property like an inheritance, a personal gift or an apartment you bought before getting married.
In some instances, however, your former spouse could claim that they’re entitled to a share of your separate property. If such claim is made, a lengthy court battle may ensue. Things will get complicated, especially if the separate nature of the property cannot be established.
This is one of the main reasons why you need to use the services of an experienced attorney during a gray divorce. If your legal representative isn’t familiar with the property division specifics stemming from a gray divorce, you may end up receiving a lot less than what you deserve.
Gray Divorce Could Come with Significant Financial Consequences
Gray divorce property divisions are very complex and often, they lead to significant financial consequences for at least one member of the couple.
According to professionals, people who get divorced in their 50s or even later on in life can expect their wealth to decrease by at least 50 percent. For women, however, it’s also likely for their income to collapse. Many women getting married in their 50s or later eventually find themselves below the poverty line because they’d been relying on a husband to ensure the financial stability of the family.
For older men, a 21 percent reduction in their standard of living could be anticipated.
When you’re older, it becomes much more difficult to bounce back from such financial shocks. Thus, you will need to think through aspects of property and wealth division before getting the marriage dissolution. Divorcing on amicable terms will simplify the process and help both of you get exactly what you deserve.
Even the most successful people will experience a financial shock due to divorce. Speak to an attorney and to a financial expert to understand the impact you’ll have to face. Chances are that right now, you’re underestimating the practical consequences of the separation.
Liz S. Coyle is the Director of Client Services for JacksonWhite Attorneys at Law. She also serves as a paralegal for the Family Law Department. She is responsible for internal and external communications for the firm.