The divorce rate for 55- to 64-year-old spouses doubled from 1990 to 2017. Late-life divorce, however, may be more complicated when spouses accumulated more assets and commingled their finances. Couples with more assets face many decisions on dividing their high-value marital property.
Late-life divorce also known as gray divorce, may have long-lasting consequences. A spouse’s wealth may drop by half if the couple divides their assets equally. But each spouse will have their own individual and higher housing costs and bills for insurance, utilities, and other expenses.
The standard of living for women who divorce after 50 falls an average 45 percent. For men, it drops by 21 percent.
Couples will also divide their retirement funds which can cause a significant drop in income when a spouse begins to draw on their accounts. This worsens the financial situation of spouses because 48 percent of households headed by a person over 55 lack any retirement savings.
Divorce may also reduce or eliminate any inheritance planned for the couple’s children. If a former spouse remarries, their new spouse will likely receive the inheritance.
Their home, which was going to be a retirement residence, may have to be sold so that its sale proceeds can be divided. Spouses will have to consider paying for costly long-term care insurance or have their adult children care for them.
Before undergoing divorce, spouses should collect financial information:
- Copies of their tax returns.
- Account numbers and balances for all bank, retirement, college savings and other accounts.
- Insurance policies.
- A list of any brokerage account holdings. This helps assure that the assets and holdings are divided simultaneously. Capital gains taxes will be assessed if this asset is liquidated before the cash is divided.
- Car titles.
- Both spouses’ credit reports.
Keeping the home may be not be feasible if there are insufficient funds for its upkeep. Find out its worth and maitenance expenses. Decide how its costs will be divided until the house is sold.
Spouses who are eligible for spousal support should decide whether they prefer regular payments or a larger share of the family’s assets. Consider taking a larger share of assets if you believe the other spouse cannot keep up with payments. The paying spouse should have the recipient named as a beneficiary on their life insurance policy.
Wills must be updated. Change the beneficiaries on life insurance and other accounts to assure their proceeds do not go to a former spouse. You may need to obtain new health insurance if you were on your spouse’s plan.
Attorneys can help develop options that meet your needs. They can also pursue your rights in proceedings.