Recent high-profile divorces of later-in-life couples such as Jeff Bezos and MacKenzie Scott, and most recently, Bill and Melinda Gates have renewed the interest in Gray Divorces. The phrase “Gray Divorce” refers to divorcing couples where both spouses are 50 years or older. Gray Divorces, also known as “Silver Splitters” or “Diamond Divorces,” are on the rise with 1 in 4 couples over the age of 50 divorcing as opposed to 1 in 10 couples in 2010. More interestingly, while the overall rate of divorce has continually declined over the last 20 years, the divorce rate of people over 50 is increasing.
Why are these types of divorces on the rise? A few main reasons that stand out in our modern society. Divorce may simply be a result of overall dissatisfaction in the relationship which leads to divorces. When there are children in the marriage, sometimes the parents have a “postponed divorce” where the parents wait to divorce until the children have graduated and moved out. The new “empty-nesters” now see no reason to stay together.
Additionally, we have seen a drastic change from when our grandparents were married to what marriages look like today. In general, humans live longer and are typically more financially independent now than ever before. Longer life expectancy and financial independence have lifted the once strong-held belief that the inferior financially dependent spouse must stay married. Now, both partners typically work outside of the home and are seeking to live their remaining days happy and healthy, relying on their own financial earnings to seek that happiness. This combined with the lessening stigma placed on divorce makes it easier for spouses, typically women, to initiate divorce when unhappy.
Ending a marriage at a later age, especially after many years of partnership between the spouses, poses unique challenges compared to divorces of younger spouses. There is less time for the parties to “make up” for any losses, particularly finances. Dividing accounts, attorney fees, and paying for two households instead of one will significantly impact the financial health of a Gray Divorcee who has less time to rebound or regrow their wealth.
We’ve put together the Top 4 Financial Impacts that are especially important in Gray Divorces.
- Retirement and Investment Accounts – Since both people in the divorce are heading toward retirement age or are already retired, both partners have likely been planning their retirement with the idea that there would be 2 people and 1 household as they age. When separated, now both parties must find a way to make their retirement cover all expenses solely. It is imperative for the soon-to-be singles to start planning for their new retirement reality right away, working with their attorney and financial advisors to weigh and compare income sources, short term and long-term goals, and the impact of distributing none, some or all of the investment account to the other spouse.
- Alimony – Gray Divorces come in all shapes and sizes including spouses who have been together for decades, spouses who are briefly married for the second ( third, fourth, or fifth) time. It is common for one of the spouses to make more money than the other. In this case, it is important to make sure that the person who made less is compensated for the loss of income upon the divorce. However, it is also important to plan for and anticipate the higher-earning spouse to retire and for their income to change. Having someone in your corner who is well versed in figuring out all of these sticky areas will greatly improve the end result.
- Estate – In Florida, spouses are married until the moment the judge signs the final judgment divorcing the couple. This means that even if the divorce has been filed but the final judgment has not been signed, the spouses are legally entitled to inherit from each other. The amount of inheritance can be reduced to the legal minimum with a proper estate plan. By employing a team of experienced family law and estate planning attorneys you can mitigate inheritance to your future ex-spouse.
- Beneficiaries and Decision Makers – It is important to make sure you have updated your beneficiaries and decide who should now have your authority to make your financial and health care decisions. This can become difficult with determining decision-makers such as children (from current marriage or prior marriage) and now ex-relatives. All policies need to be reviewed and revised accordingly by professionals to ensure the beneficiaries and decision-makers are consistent with your desires and do not include ex-spouses or relatives (unless you want that).
In these later-in-life divorces, understanding what tools and benefits are available and how they can be distributed is paramount as you plan for a new future. At McCart & Tesmer we specialize in all of the above arenas and would love to sit down and discuss how we can help you. Whether your separation is amicable or more contentious, you need a team by your side to make sure your Gray Divorce goes as smoothly as possible. Give us a call today!
