For Sacramento couples who are preparing for “gray divorces,” or divorces after age 50, financial concerns associated with divorce may prove to be especially challenging.
In California, each spouse is entitled to half of all “community property” during a divorce, unless a couple agrees otherwise. This may sound simple, but identifying marital assets and appropriately dividing them can be complex. The consequences of a poor division may be irreversible and particularly severe on an older couple.
Couples that have spent most of their lives married to one another are particularly susceptible to depression during a divorce due to the drastic change of being single after so long. For many spouses, financial issues may seem like secondary concerns to their emotional turmoil. However, spouses who fail to plan financially and pursue their share of assets may face significant hardship after the divorce.
Challenging property division considerations
The New York Times explains that asset division can be difficult during gray divorce due the complexity and volume of older adults’ assets. Even identifying and valuing assets of an older couple can be difficult depending on the amount of assets the couple has. Some assets, particularly old savings accounts or retirement accounts, may even be forgotten by a couple. To ensure an appropriate division of complicated assets, spouses should work with both a financial planner and an attorney.
Importance of spousal support
A spouse who was unemployed during marriage should take particular care during a gray divorce in securing spousal support. In a gray divorce, parties are close to retirement-age, making it harder, if not impossible, to enter the workforce. Further, the mere idea of starting a career after the age of 50 is unpleasant, regardless of the difficulty. For people in this situation, obtaining a proper support order may be crucial.
It is equally important, however, that a supported spouse does not rely entirely on spousal support for their financial needs as support usually terminates when a spouse dies. To offset the risk of losing spousal support because of death, a supported spouse may want to negotiate a higher lump sum payout of assets in exchange for a lower monthly support payment.
Consequences of a poor settlement
As The New York Times notes, after a divorce, a spouse’s retirement savings are essentially cut in half. This is a significant issue for older spouses who have limited time to work and make up for any financial deficits. Additionally, divorced spouses typically must cover greater expenses on various costs, from housing to insurance.
According to USA Today, a single divorced spouse may pay 30 to 50 percent more to retire than a married spouse. In response to these increased expenses many divorced spouses are postponing retirement, reducing expenses, or planning on living on smaller retirements. A fair division of retirement benefits and other property may not completely eliminate the need for these measures. However, it may help ease some of the financial burdens that spouses face after gray divorce.
In light of these financial complications, anyone who is preparing for a gray divorce should consider speaking to an attorney. A family law attorney may be able to offer advice on characterizing, valuing and dividing community property. An attorney may also help a spouse work toward a settlement that protects his or her financial interests.