Relationships and circumstances change as we progress through life. It is becoming more common for couples over the age of 50 to divorce later in life. Divorces at a later age are often referred to as “gray divorces,” and they pose unique challenges. A gray divorce can be emotionally and financially challenging, but with the right planning and support, couples can overcome the difficulties and move forward to a more fulfilling future.
A professional advisor like a divorce lawyer in Prescott, a financial planner, or a therapist can be invaluable during this time. Here are five essential questions to consider when facing gray divorce.
Are Assets Classified Differently for Couples Who Divorce Later in Life?
When a couple divorces, assets are categorized as marital or separate. In Arizona, marital (community) property generally refers to the assets acquired during the marriage and is divided equitably, which doesn’t always mean equally. When a couple has been married for a significant amount of time, it is more likely that property that started as separate can become marital property, at least in part.
In cases where separate property acquired before marriage or received as an inheritance or gift from a non-spouse (“Separate Property”) is commingled with marital assets, it may be transformed into marital property. It is possible to preserve the value of separate property with accurate records, but this is often difficult for couples who have shared assets for decades. Working with a forensic accountant might be worthwhile if the separate property needs to be traced.
Longer marriages also increase the risk of one spouse forgetting or not knowing assets. Property can be located, classified, and valued properly with the assistance of a Prescott divorce attorney experienced in gray divorces.
In a Gray Divorce, What Financial Planning Is Necessary?
When both partners are near or in retirement, careful financial planning is imperative since they have less time to rebuild retirement savings than they would if they had divorced sooner. Equitable distribution of retirement benefits might require specialized processes like a Qualified Domestic Relations Order (QDRO).
Based on the ex-spouse’s record, those who have been married for at least ten years may be eligible for Social Security benefits. Retirement and spousal support decisions can be influenced by understanding this. If one spouse relies on the other for health insurance coverage, spousal support can be invaluable to the other, helping with living expenses, job training, and health insurance. Health expenses should be planned, whether through spousal support, private insurance, or government programs.
When It Comes to High-Net-Worth Divorces, What Are the Best Ways to Handle Them?
When a divorce involves significant assets, such as stock options, a private business, a professional practice, or real estate, tax implications, loss carry-forward distribution, and asset preservation, experienced counsel is required, but as couples age, the difficulty increases. When one spouse plans to buy out the business interests of the other spouse with payments over time, it is important to have insurance or another backup plan to secure the payments if the other spouse passes away or cannot make the payments.
As couples approach retirement age and face required distributions, they must allocate liabilities for taxes that may have been deferred for decades. Tax liability can also be a significant issue in high-net-worth gray divorce cases. Tax planners, financial advisors, and divorce lawyers in Prescott, AZ, who are experienced in high-net-worth divorce, can help protect both partners’ interests.
What Is the Impact of a Gray Divorce on a Person’s Career and Personal Life?
After a divorce, spouses may be dislocated from intertwined social circles formed during long-term marriages. Social networks can be rebuilt with the help of support groups. Even though gray divorces do not usually involve child custody and support issues, adult children and grandchildren may find it difficult to adjust to the changed dynamics of their families. To alleviate concerns and restructure family traditions, open communication is essential.
The career plans of each spouse may need to be changed depending on their assets and needs. There may be a need for a working spouse to delay retirement or to reenter the workforce. A spouse who needs to work for financial resources but hasn’t worked for some time may need additional training or education, which should be addressed in the divorce settlement. When career training is necessary, alimony is often awarded. An experienced family law attorney in Prescott can help guide you through this process.
How Are Long-Term Marital Debts Divided During a Gray Divorce?
Spouses split marital debts and assets equally. During the marriage, you may have acquired mortgages, loans, credit cards, or other obligations. Generally, the court distributes debt fairly but not equally. Equitable division is often more complicated in gray divorces, particularly if one party has higher earning potential and the other does not intend to stay in the workforce for long. Spouses must provide their family law attorney in Prescott, AZ, with detailed information about the debts and why they shouldn’t be expected to bear an unfair share of the burden.
Getting the Right Guidance for Gray Divorce
Although gray divorce has its challenges, it can also open up new possibilities, and for many unhappy couples, it has provided a bright future. Willison Law, PC, specializing in family law in Prescott, AZ, is ready to help you navigate the challenges and emerge prepared for a better life. To get started, please contact us for a confidential consultation.
Divorcing seniors face more issues than their younger counterparts, such as spousal maintenance, Social Security benefits, and division of retirement assets. Seniors who divorce must make complex decisions relating to their Social Security benefits. According to the Social Security Administration:
In a gray divorce, it is crucial to understand the available benefits and the choices that need to be made because of the financial impact. For example, a divorced spouse might maximize his or her Social Security benefit by starting their spousal benefit at full retirement age (FRA) and then switching to their benefit at 70. Waiting to collect their benefit could result in a significantly higher payout down the road because benefits rise by about 8% a year between 66 and 70.
If the divorcing senior decides to take the spousal benefit before reaching full retirement age (66 for those born between 1943 and 1954), their benefit will be permanently reduced even more, between 7% and 8% for each year leading up to their FRA (a 30% reduction at age 62 on the spousal benefit). Therefore, claiming the benefit early is often not economically viable.
Surviving benefits differ as well. For example, someone 60 years old and married for ten years or more would receive their deceased ex-spouse’s Social Security payout the same as a widow or widower. Survivor benefits have different rules regarding marital status. Marriage does not affect the ability to collect survivor benefits as long as the surviving spouse does not remarry before the age of 60.
A spousal benefit can make a significant difference in a gray divorce, particularly when neither spouse is working, and both are living on fixed incomes. If one of the spouses in a gray divorce is still employed, spousal maintenance will almost certainly be awarded to the non-working spouse unless the income from the assets being divided is so substantial that the recipient spouse is unable to meet his or her reasonable needs without financial assistance. One of the effects of persons working longer is that spousal maintenance entitlements in gray divorces have increased.
Final Thoughts
Sufficient preparation and assistance are essential for anyone negotiating the intricate terrain of retirement and gray divorce. Those going through a gray divorce have the chance to embrace change and build a rewarding retirement.
You can effectively manage the difficulties of gray divorce and create a financially stable and fulfilling future by putting a strong emphasis on self-care, creating a support system, and making thoughtful plans. To help you negotiate the difficulties of a gray divorce and create a strategy that guarantees a safe and satisfying retirement, financial experts and a specialized divorce attorney in Prescott, AZ, can offer invaluable guidance and support.
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