Michigan Gray Divorce: Important Financial Considerations

Divorce isn’t just for the young; a rising number of older couples nearing or at the age of retirement are choosing to call it quits in a trend known as “gray divorce.” What’s driving this growing divorce demographic? For one thing, there’s less stigma surrounding divorce than in the past.

People are also living longer and experiencing better health well into their senior years. Once kids are grown and retirement is imminent, couples may discover they have little in common to keep them together.

Additionally, women who have spent a lifetime working enjoy greater financial independence than in generations past, making them less likely to remain in unfulfilling relationships for purely financial reasons.

While divorce might be the best decision for you, there are important financial considerations that come with divorcing at this stage of life.

Division of Assets, Including Retirement Accounts

Finances for older couples can look very different than when they were young. You may jointly own one or more properties that are paid off. You probably have a range of assets like investment portfolios, retirement accounts, and life insurance policies.

If you’ve reached the age of retirement, you may be on a fixed income. This can complicate the division of assets. All assets, including retirement accounts and existing life insurance policies, are considered marital property from the moment you’re married, although you may not be required to include contributions made prior to marriage.

Life insurance is generally only included if it has accumulated cash value, as with a universal life policy, for example. If there is no cash value except in the event of death, you will simply have to decide whether you want to remove your spouse as beneficiary and assign someone else (such as a child). Don’t forget, Social Security payouts may also be included in marital assets, depending on how long you’ve been married.

Spousal Support

If one or both spouses are still working, spousal support may factor into a divorce settlement. What if one or both of you are retired? Typically, spousal support based on earned income ends at the age of retirement, but that doesn’t necessarily negate some form of support based on retirement or pension benefits.

There are a few ways a couple might decide to divide retirement assets. One is to split monthly payouts, offsetting the difference between retirement income if both parties have retirement accounts. Alternatively, the spouse responsible for support payments could pay a lump sum based on the value of retirement accounts at the time of divorce.

Support for Grown Children

Although many gray divorces don’t involve child custody issues because shared children are grown, you may still have kids in college, or you might have plans to help adult children with wedding expenses or the purchase of a first home, for example.

While parents may share some financial responsibility for college expenses, plans to support adult children don’t usually entail a legal obligation, so you might want to discuss setting a portion of joint assets aside as part of the divorce settlement.

Get Valuable Legal Guidance

Gray divorce can be more complex than divorces involving younger couples with fewer assets. However, when you understand what is included in marital assets, you can make sure everything is accounted for in the divorce settlement.

Do you need legal guidance and support in your gray divorce? The caring and experienced team at Gucciardo Family Law is ready to help. Contact us today to learn more.