Gray Divorces – What You Should Know if This Happens to You
So called "gray divorces", where couples terminate a marriage in a latter stage of life, is on the rise. I've seen this in my own family when a family member’s marriage ended after close to 50 years. It was tough. Such divorces can come with implications and issues that are different in scope and complexity from the more typical "young" divorce.
For one thing, in such cases, there may be more family members who have a stake in the breakup than when divorce occurs at an earlier stage. Many times, when divorce occurs when a couple is in their 20s to 40s, and there are children still in the home, the primary concern is the care and well-being of the kids. In a gray divorce, the "pool" of descendants may have expanded to include not only older children, but also grandchildren or even great-grands, all of whom are affected in one way or another. This is especially so if the couple has outlived one or more of their children.
Regardless of their ages, consideration needs to be given to the succeeding generations. For example, does college still need to be paid for and if so, who will pay what? What about the wedding costs that may be in the future of any unmarried children? Have Granny and Granddad been helping pay for things like summer camp, private school or day care, and if so, will that continue and how?
Another way that a gray divorce may be different is that older couples tend to have accumulated more wealth and other assets that have to be sorted out and split. For purely financial assets, many will have their investments held together in one account, which can make the tracking and splitting of them relatively easy. For this reason, if they are not consolidated, it may make sense to temporarily combine accounts as part of the process into one large account (after consulting with your legal advisor of course) to simplify things.
Other intertwined assets and interests may not be so easy. Think personal homes, jointly owned vacation homes and rental properties, and a family business, if there is one. Will one spouse continue to occupy the current home, with something of equal value compensating the spouse moving out, or will it be sold? Can you amicably continue to be partners in the business or rental venture?
An additional consideration regards financial and legal advisors. Chances are the couple have been using the same advisors during the marriage, but with the split pending, that should change. In fact, it would generally be considered an ethical violation for such an advisor to be serving the both of you during the divorce process, so at least one of the spouses will need to find new advisors.
Speaking of legal counsel, a divorce situation will necessitate revising estate planning documents, especially if the plan in place calls for everything to be left to the surviving spouse. Wills and trusts that exist will need to be updated, and don’t forget beneficiary designations that may need changing, such as for IRAs, 401(k) plans and life insurance policies. While you are at it, you should review existing Power of Attorney assignments and Healthcare Proxies too.
As you can see, this can start to get complicated. All these issues need to be carefully and objectively thought out, something not necessarily easy to do during what may be an emotionally stressful time. But with a little intentionality and care, they can be planned for and dealt with effectively, leaving you and your offspring with peace of mind regarding your futures.
Our EGP tax advisors and the financial planners of our sister company, EGP Wealth Management, stand ready to assist you in any way we can to navigate through difficult times like these.
And should you decide to say "I do" again in the future, well, for sure, let’s talk!
