Special considerations involved in late-life divorce typically include the possibility of post-divorce financial hardship; alimony; the status of retirement, life insurance, and Social Security benefits; and other matters. Child support and custody issues typically play no role in late-life divorce.
As gay marriage has entered the mainstream, so has the concept of “gray divorce.” In 2017 the Pew Research Center reported that the divorce rate for those over the age of 50 had doubled between 1990 and 2015. In fact, the gray divorce rate tripled during the same time period for senior citizens (65 and older). Although for inevitable statistical reasons this multiplier effect cannot continue much longer, it represents one of the strongest demographic trends in American society.
The Likely Financial Consequences of Late-Life Divorce
Unfortunately, for those already struggling financially, a likely financial consequence of gray divorce is poverty. One of the main reasons for this reality is the same arithmetic that applies to the divorce of younger couples: It is 40 to 50 percent more expensive (on average) to maintain two households than one, because so many expenses can no longer be shared. All of this might happen while you are facing the special financial vulnerabilities that many older people face.
Alimony (Spousal Support)
Alimony, also known as spousal support, is a court-ordered payment from one spouse to the other spouse for financial support that continues even after the marriage ends. Alimony may be paid from one higher-earning spouse to the spouse with lesser (or non-existent) earning power. Typically, this support is paid monthly rather than in a lump sum. It might be paid for a temporary period, or it might continue for life, depending on the content of the court order.
One of the main factors determining the length of time that alimony is paid is the length of the marriage. The longer the marriage lasted, the longer alimony payments are likely to last. This is obviously relevant to gray divorce, because a disproportionate percentage of gray divorces end marriages that had, up until then, endured for decades. For this reason, long-term and even permanent alimony payments are more likely in a gray divorce.
Child Support and Child Custody
Because a woman’s prime child-bearing years are over long before age 50, and because the birth rate drops sharply among women as they age, most gray divorces do not involve minor children – the children have typically already become legal adults by the time their parents’ divorce occurs. Consequently, child custody and child support issues usually do not arise in gray divorces.
When a married couple divorces, their marital property is divided according to state law, based on either the community property principle or the equitable distribution principle. Iowa family law applies the equitable distribution principle. Either way, however, marital property is divided in a relatively equal way between divorcing spouses.
Gray divorce raises special property division issues because (1) older couples have had more time to accumulate large amounts of property, which complicates the property division process, and (2) certain types of property, such as retirement benefits and life insurance benefits, become more important than they typically are when a younger couple divorce.
The division of retirement benefits
Retirement benefits are considered marital property under Iowa law, and normally, both spouses should receive a share, even if the retirement plan was taken out in the name of one spouse only. Dividing up a retirement plan, however, usually requires a separate court order called a Qualified Domestic Relations Order (QDRA).
The division of a retirement plan needs to be prepared carefully, with great attention to detail. You will probably need to know:
- the content of the Summary Plan Description (which should be available from the retirement plan administrator);
- how to avoid tax penalties on distributions;
- whether survivor benefits are available to the other spouse even after a divorce;
- whether hardship withdrawals are available; and
- if the retirement plan is based on service in the US military, whether the other spouse is entitled to survivor benefits.
Social Security benefits
Social Security benefits are not considered marital assets. Nevertheless, before you finalize a gray divorce, you will need to speak with a financial analyst and a tax consultant to determine how Social Security benefits would be best distributed after the divorce. Should you draw from your own Social Security benefits or your spouse’s?
If you would like to collect Social Security retirement benefits on your ex-spouse’s Social Security record (which might allow you higher payments under certain circumstances) but you do not wish to lower your ex-spouse’s payments, you can accomplish this as long as:
- You are at least 62 years old; and
- Your marriage lasted at least 10 years.
This could be a lifesaver if you were not in the workforce during your marriage.
Certain questions need to be answered before a final property division settlement is reached. You will probably not be able to even think of all of the issues involved without talking to an expert on the subject, and your lawyer will not be able to address every issue you may have.
Social Security survivor benefits
If your ex-spouse dies before you do, you might be eligible for Social Security survivor benefits equal to the amount your ex-spouse was receiving at the time they died, even though you divorced, as long as you are at least 60, your marriage lasted at least 10 years, and you are not entitled to retirement benefits that already equal or exceed the amount you would receive under Social Security survivor benefits.
Life insurance and Alimony
If you hold a life insurance policy that names your spouse as the beneficiary, you can change your beneficiary to someone else after your divorce, unless you still owe your ex-spouse alimony. As long as you still do, the family court judge might order you to keep your ex-spouse as the beneficiary in the amount and duration of your alimony obligations.
Don’t Delay – Call 303 Legal Today
If you are involved in a late-life divorce, or if you anticipate becoming involved in one in the near future, proper planning and execution are essential to avoid disaster. Contact 303 Legal, P.C., by calling directly or contacting us online to schedule a consultation.