According to a 2015 study by the Pew Research Center, the divorce rate for individuals age 50 and older or gray divorce has approximately doubled over the last twenty-five years. For couples who had have spent most of their adult lives planning to share their home, finances and future divorce can have significant financial implications.
Gray divorce usually refers to couples who have been married for twenty or more years. For many working individuals, this means having been married for most of their careers. If one spouse stayed home with children or accepted less lucrative employment to support the higher wage earner’s career, this can leave them at a financial disadvantage. In this situation, the divorce court may decide to award the less well-off spouse with alimony or spousal maintenance. While this is not guaranteed, when there is a disparity in income and the couple has been married for a long time there is a higher probability that one partner will have to pay the other maintenance. Depending on the circumstances, one spouse may have to pay the other temporarily or even permanently. For the obligated party, this ongoing expense could mean a substantial reduction in retirement income or even delayed retirement.
Dividing Tangible Assets and Debts
In a Michigan divorce, the law requires that a couple’s marital assets and debts be distributed equitably. The court can look at numerous factors to decide what is fair, but in most cases, marital assets and obligations are going to be apportioned in a way that puts each person in a similar financial position. However, when it comes to certain assets such as a car or house, either one party will be awarded the property, or it may be sold, and the two will split the proceeds.
When a couple has shared a residence of several years deciding who gets to remain in the home can be difficult. Further, having to bear the expense of home maintenance alone may not be realistic for one partner. Selling real property and finding a new place can be equally complex. When a couple has equity in their residence, and the market conditions are favorable, they may get considerable proceeds from their home sale. However, depending on home prices, even with a substantial profit, the recipients may not be able to afford to remain in the same neighborhood after the sale.
Retirement and Social Security
Retirement contributions which were made during marriage are considered marital property and are therefore subject to equitable distribution in divorce. This can have a significant impact on both individuals as they must now adjust to having fewer retirement resources. For instance, if the couple planned to retire together and live on more of one partner’s pension benefit, and now has to split that pension, each person’s entire retirement scheme will be significantly impacted. When it comes to social security, when couples who have been married for ten years or more, one spouse may be allowed to get social security benefits on their spouse’s record. At full retirement age, this spouse will ordinarily be qualified for half of their partner’s benefit amount.
Divorce can be costly for anyone, but there are added considerations for those entering or in their senior years. We understand the unique challenges which can be presented when couples divorce later in life. Contact us online or by phone if we may be of assistance. https://www.michiganestateplans.com/contact/