I just retired and I am ready to start the next chapter in my life, but without my wife. I have heard of this phenomenon called a “gray divorce.” What are factors to consider in getting a divorce later in life?
“Gray Divorce” is a common term for divorce over the age of 50. It is a funny name for the phenomenon considering I just turned 50 and have no plans to let my hair go gray any time soon! With the benefit of age comes the ability to accumulate wealth. All the effort one party puts into saving for retirement or building equity in a business, can make for a more complex divorce. “Gray divorces” warrant special consideration in the following areas:
- Income – Those individuals divorcing post-retirement are likely living on a fixed or limited income. Whether retired individuals are receiving income from a pension or from distributions from a retirement account, most retirees do not have the same income level as they did before retirement. This can make divorce at a later age proportionally more costly.
- Retirement Accounts – In Pennsylvania, if an income-producing asset has been awarded to a party in equitable distribution, the same asset cannot be counted as a source of income from which alimony may be paid. For instance, a pension in pay status cannot be counted as income for alimony purposes if it was also a marital asset that has been divided in equitable distribution. The concept of a “double dip” may sound logical and straightforward, but retirement accounts must be valued and divided carefully.
- Marital Home – The family home is often one of the largest assets in a divorce and can trigger the most emotion – especially if you have lived in the house for a very long time. There are many factors to consider when deciding how to handle your home. If one spouse keeps the house, will they be able to afford to maintain it with only one income? What alternative assets are available to offset the equity they retain? If one party keeps the home, will they be able to qualify for new mortgage?
- Life and Long-Term Care Insurance – Whole-life insurance policies taken out during the marriage with cash values are subject to equitable distribution. Term-life policies, on the other hand, do not have cash value. In many divorces, a term-life policy on the spouse who pays alimony is taken out to ensure payments will be covered in case of death. However, in “gray divorces,” life insurance can be more difficult and costly to obtain. In some instances, annuities or other types of options can be explored to ensure the payment of support obligations where a spouse does not qualify for life insurance.
- Trust and Estate Plans –Once your divorce is final, you will need to make sure you update your estate plans with updated beneficiaries. It is important to enlist the counsel of an experienced Estate Planning Attorney.
If you have made the decision to divorce, you should consult with an experienced family law attorney to understand your rights and obligations as you move forward with the process.