“Grey divorce” presents special financial considerations
The National Center for Family & Marriage Research at Bowling Green University conducted a study about divorce rates among different age groups and discovered that the divorce rate among those over 50 years old had doubled between 1990 and 2009. Researchers found that approximately one in four of the divorces that occurred in 2009 were between spouses over 50 years old. The American Association of Retired Persons coined the term “grey divorce” for this trend as early as 2004. Grey divorce presents unique financial considerations, differing from divorces between younger spouses. Georgia residents considering divorce later in life should be aware of some of the financial aspects of grey divorce.
Managing daily finances
In many long-term marriages, it is not unusual for spouses to divide managing the household so that one spouse handles chores and the other spouse takes care of financial matters. Many people going through divorce later in life have no experience with managing daily finances. Trying to learn how to manage money may seem intimidating, but it is critical for people to learn basic financial skills such as balancing a checkbook, setting and sticking to a budget, paying bills regularly and simple investment techniques in order to ensure financial stability after divorce.
Georgia is an “equitable division” state, meaning that the court will apportion marital property between spouses in the way it thinks is fairest – which does not mean equally. The courts look to a number of factors when deciding how to divide marital assets, including:
- The separate, or non-marital, assets each spouse has
- The length of the marriage
- The earning potential of each spouse
- Whether a spouse dissipated any marital assets during the marriage
- Each spouse’s future needs
- Each spouse’s debt level
- Any misconduct a spouse committed during the marriage
When choosing which assets to ask for in a property division, each spouse should consider his or her cash needs in the future and the liquidity of marital assets. A spouse who opts to keep the marital home may find that he or she needs cash and will end up having to sell the home. People should also review the tax implications associated with certain assets. For example, a person who gets cash in a retirement account in a property division will have to pay taxes on that money when withdrawing from the account.
Those who divorce later in life need to take special care when dividing retirement assets such as IRA accounts, 401(k) accounts and pension plans, since they have less time remaining in the work force to save up more money for retirement than those who divorce at a younger age. These assets are typically marital property, and special rules govern how they are distributed depending on the type of account. Dividing these assets can be complex, and it is best if attorneys are involved in the process so they can ensure it is handled properly.
People who have been married for many years may forget that they named their spouses as beneficiaries on retirement accounts, life insurance policies and other similar assets. They may also have health care proxies or powers of attorney drawn up in favor of their spouses. People should review all their account beneficiaries after divorce to ensure that their ex-spouses will not inherit assets that people want to go to others after divorce.
A seasoned divorce attorney can help those going through divorce address the various financial issues that grey divorce presents.