Couples in California and elsewhere can fall out of synch with their priorities, goals, or even basic daily needs after being together for a long time. What had been a source of emotional and financial security for so long begins to feel like a cage, as the purpose and meaning for being together shifts under their feet.
The recent rise of gray divorce is a global trend, led like so many other social phenomena by the baby boom generation as they head into their golden years. According to the Pew Research Center, whereas divorce for other age groups declined or only slightly rose over a 25-year period, divorce among those aged 50 and older has gone up over 100% and tripled for ages 65 and older.
For Carlsbad couples going through divorce, the financial and health risks of splitting can be much higher the longer you have been together, so it is important to take a step back and consider all the angles of the divorce process to ensure your future security.
Financial priorities in gray divorce
When older couples decide to split, it isn’t just about not getting along. There can be specific life events or gradual changes that spark the decision to divorce, such as:
- Empty-nest syndrome from a child leaving home for college
- Increasing financial independence of wage-earning women who are less dependent on their spouse.
- Separate employer benefits for women, which make divorce more accessible
But couples who have been together for decades will have unique challenges, as they often have a substantial accumulation of assets that become very difficult to untangle without liquidation. In California, everything that a couple has accumulated from the beginning of the marriage is marital property or debt that is subject to equal division. While it is less complicated to split bank accounts and cash, the couple will have to conduct a valuation of assets such as:
- the family home or vacation property
- annuities and retirement accounts
- a family business
so that they can move forward with difficult decisions about trading or liquidating shared assets. If the couple has used the same financial planner, they now must have separate advisors. They will have to consider changes to healthcare or life insurance beneficiary designations, as well as understand how their Social Security benefits may change with divorce.
Unique family issues in gray divorces
When an older couple divorces, it will impact not only their lives but also their children’s. If they have college-aged kids, they will most likely still need to share financial decisions about tuition and other expenses for them. When their adult children get married, they will want to come together to decide who will pay for the wedding. It is better to address these concerns during divorce negotiations than wait for them to pop up later.
Many couples also forget about estate planning decisions that they have made during a divorce. It is essential to update documents such as a power of attorney and a will or trust to reflect changing beneficiary designations.
Getting remarried has its own issues as well, so it is wise to draw up a prenuptial agreement that clarifies where your assets will go and who are the beneficiaries, so your property does not become commingled in another marriage. This will also set limits on what financial responsibility your children owe a stepparent should they need medical or long-term care.