Divorce rates have more than doubled since 1990 for adults 50 and over, while rates have been declining for those under 39, and increasing slightly for persons in between, according to the Pew Research Center. The trend even has a name – “gray divorce.” Lawyers whose practice includes divorce have seen this trend, with more older divorce clients in our offices than before.
Overall, the rate of divorce peaked in the 1970s and early 1980s. It has declined steadily since, but a 2016 University of Maryland study says 52.7% of new marriages will end in divorce. Among those divorces, though, more involve Baby Boomers. The Pew Research Center reports that of couples divorcing in 2016, about a third had been in this marriage for at least 30 years, and 12% had been married 40 years or more.
While divorce cases have many factors in common, gray divorces raise special concerns:
- Retirement savings and planning. Remember that in NC, retirement savings put aside by either party during working years of the marriage are marital property, not that worker’s separate property. Dividing those assets fairly is critical for gray divorce clients who will have fewer years to rebuild retirement savings and to invest effectively. Retirement accounts are often one of the largest assets in a long-term marriage. One party cannot unilaterally withdraw assets from an ERISA (employer-based) plan without the spouse’s written consent. For other types of retirement assets and investment accounts, judges can enter a restraining order to preserve those assets intact if that is needed.
- Team approach. I find it helps these clients greatly to consult a financial planner and/or accountant. Input from these professionals helps a lawyer arrange a more beneficial settlement, and avoids unpleasant tax or investment surprises.
- Social Security. Neither a court’s order nor the parties’ agreement can change Social Security rules. Generally, you have a choice between drawing on your own Social Security earnings record or claiming a benefit equal to one-half of your former spouse’s benefit if (a) you were married at least 10 years, (b) you are at least 62, (c) you remain unmarried, and (d) your former spouse has qualified for benefits. The good news for the higher income spouse is that your spouse claiming based on your record does not reduce your own Social Security benefit.
- Health Insurance. Once spouses are divorced, by federal law one cannot be covered on the other’s health insurance plan. Until Medicare eligibility at age 65, health insurance may be extremely expensive. One option is for the parties to remain legally separated but delay divorce so that joint coverage can continue. Another option in settlement is to have alimony increase if health insurance premiums go up.
- Estate Planning. It is important to update beneficiaries on life insurance, retirement accounts, and your will after divorce. Remember that you should never name minor children or minor grandchildren by name on these beneficiary forms or in a will, or you will trigger the need for an expensive guardianship to hold the assets until the minor beneficiary reaches age 18.
Whether a gray divorce is the result of mutually putting off divorce until the kids are grown, is from parties growing apart and seeking independence, or is the abrupt ending from an affair or other marital fault, financial security goals can take on special importance for those involved in a gray divorce.
Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough, NC. She can be reached at 919-732-7300 or firstname.lastname@example.org.
This article was last updated in January 2020.