After being married for decades, divorce seems unlikely. While the overall divorce trend is going down, among couples in their 50s and 60s, there’s been an increase over the past decade.
It’s become such a trend that it even has its own name – gray divorce. And whether it’s something you’ve been planning or it has come as a complete surprise, it’s essential to understand the financial complexities so you can move forward with confidence.
Your new future
Individuals nearing retirement or who are already retired have a limited time to rebuild financially after their divorce. Therefore, financial readiness is at the core of preparing for a gray divorce. Couples married for decades have complex financial lives with assets such as real estate, retirement accounts, personal property and investments to consider.
Washington is a community property state, meaning that any assets acquired during the marriage are divided equally when couples divorce. Separate assets, such as those owned before the marriage or received as an inheritance, typically remain with the original owner, unless they’ve co-mingled, i.e., an inheritance was used for house renovations.
Retirement savings are often a substantial portion of an older couple’s assets. If both spouses worked outside the home during the marriage and contributed to their own 401(k)s, they may both decide to hold on to their individual accounts.
If the retirement accounts are divided, they may require a Qualified Domestic Relations Order (QDRO) to avoid penalties for withdrawals. You may also qualify for Social Security spousal benefits based on your ex-spouse’s work history. This can be helpful if you didn’t work outside the home or worked at a lower-paying job.
Spousal maintenance is often awarded in gray divorces, particularly if one spouse was a homemaker and primary caregiver. The court considers the following when assessing spousal maintenance:
- The length of the marriage (longer marriages often result in more substantial support monies)
- The age, health and earning capacity of each party
- Both parties’ financial resources
You may be feeling overwhelmed at the thought of a gray divorce. Speak with someone who will ensure your rights are protected and help you move into your next chapter with the financial resources to which you are entitled.
