We all know that divorce can offer a fresh start for departing couples. However, for those divorcing later in life through a so-called gray divorce, a well-funded retirement plan, as well as other property and assets, may be at stake. This is why it is so important to plan and consult a divorce attorney immediately.
What is a gray divorce?
The term gray divorce refers to divorces that occur when spouses are aged 55 or older. This is also known as Silver Splitters or even Diamond Divorcees. And, unfortunately, according to reports, these late-life divorces can create or worsen the financial vulnerabilities of retirees. This is because those who divorce earlier in life often have more time to recoup any financial losses from a divorce.
Financial planning is key
This means contacting a divorce attorney before initiating proceedings and likely calling in a financial expert as well. These professionals can help one plan for life post-divorce. They can provide education on how to live post-divorce, including how to budget, manage money and pay expenses. This may mean:
- Working longer and delaying retirement
- Going back to work
- Modifying prior, planned retirement living arrangements and conditions
The legal and financial professionals on your team will help you understand what qualifies as separate or marital assets and debts. Some assets have different pre-tax and after-tax values, which will affect how they are split. Retirement and pension plan splitting can quickly become complicated depending on how long the couple was married and when the retirement and pension plan began. Moreover, part of understanding the asset division process is understanding what Social Security benefits one will be entitled to post-divorce.
Of course, most gray divorcees already have an estate plan in place, as well as life insurance, bank accounts, etc. After the divorce is finalized, one must go back and update all of these. After all, one likely will not want their life insurance going to their ex-spouse, and even if one changes their will, life insurance proceeds will be directed to the beneficiary. In addition, remember to contact your estate planning attorney to update all of your estate planning instruments because these are not automatically updated through a divorce decree.