Divorcing Later in Life? What You Must Consider
Couples choose to divorce for a number of reasons–and choosing to divorce later in life is becoming increasingly common. Some couples realize, once the children are grown, that they don’t have as much in common as they once thought. Others find, after retirement, that their goals are much more different than they initially thought.
While divorcing later in life has become increasingly common, it can create some unique challenges for couples. If you’re planning to divorce later in life, you have some unique factors you must take into consideration.
1. Distributing marital property (especially the house).
When you get divorced early in life, it’s often fairly easy to decide who gets the house. It might go to the spouse who keeps the children, since most parents agree that they want their children to remain in the home where they feel comfortable. If child custody doesn’t determine who keeps the house, it could end up based on the spouse who has the income to continue paying off the mortgage.
When you get divorced later in life, on the other hand, the house may be paid off completely. For many couples, this is your largest asset. You may need to consider selling the house and splitting the proceeds, or you may have to consider other arrangements that will help pay for the spouse who does not stay in the home.
2. Ensuring health insurance for all parties.
Does one spouse provide health insurance for both of you? As you age, your health insurance many become increasingly important–and losing it can cause more substantial problems. Before you get divorced, consider how you want to handle your health insurance. Provisions may include:
- Using COBRA to continue insurance benefits for a time, especially until you can find something better
- Requiring the spouse who will keep their insurance to pay for a policy that covers the spouse who stands to lose their insurance
- Using Medicare to provide insurance for the spouse losing their policy
3. Determining alimony.
Alimony helps provide support to a spouse who has sacrificed their own career in order to provide for the family throughout a marriage. Often, alimony goes to a spouse who has considerably lower income, or who has not worked to support him- or herself throughout the marriage. As you age, that can become even more important. If you have not worked for the past several years, you may have fewer opportunities for employment. It may take longer for you to arrange to go back to school, and even if you do, you may not have opportunities that will allow you the quality of life you would have had, had you remained married. As a result, couples who divorce later in life must more carefully consider how they will handle alimony.
4. Social security benefits.
Later in life, you may seriously consider starting to draw on your social security benefits. Unfortunately, if you have not worked, you may not have social security benefits to draw on. Spouses who have not worked, but who have been married for at least ten years, can sometimes draw on their ex-spouse’s social security benefits. You can potentially draw on your spouse’s social security benefits, without reducing the amount your spouse can draw, if:
- You are 62 or older
- You were married to your spouse for at least ten years
- You have not remarried
- You can receive more benefits from your ex spouse’s work than you could from your own work
If you get divorced later in life, you may need to carefully consider those benefits and how they have the potential to impact your finances in the aftermath of a divorce. Make sure you know when and if you have the right to draw social security benefits and whether it will help improve your financial standing.
5. Retirement and pension accounts.
Like social security, a spouse who does not work cannot accumulate a retirement account of their own. Some spouses create a retirement account in the name of their spouse, enabling both to continue saving money over the years even when one spouse does not work. Others, however, may simply assume that they will share their retirement funds.
Then divorce happens, and a spouse who has not worked or who did not have the means to save for retirement may not have a retirement account to fall back on.
If you get divorced later in life, you may need to carefully consider how you will handle distribution of the retirement accounts built throughout your marriage. In general, payments put into those retirement accounts throughout the marriage belong to both spouses, just like the rest of your marital assets. During your divorce, you will need to decide how to equitably distribute those funds.
6. Life insurance.
Do you have a life insurance policy that will benefit your family if you die?
Who benefits?
Some couples, during their divorce, decide that one spouse will keep a life insurance policy on the other. This is especially common when one spouse will pay alimony for a significant period of time: a life insurance policy can help cover the surviving spouse’s bills if the other dies before they meet their full financial obligations. Others, however, may want to direct their life insurance policies to their children or other beneficiaries, rather than keeping them as they were throughout the marriage.
You may also want to consider other aspects of your estate planning when dissolving or rewriting your life insurance policies: who receives your assets if you die or who has power of attorney if something happens to you, for example.
Divorce may, on the surface, seem less complicated when you no longer have minor children to consider. For many couples, however, divorce becomes increasingly complicated with age. If you’re planning a divorce in Louisiana or struggling to decide how to proceed in order to protect yourself as much as possible, contact Betsy A. Fischer, LLC today at 504-780-8232 to learn more about what you must consider when you get a divorce.