Grey Divorce

Grey divorce is a term referring to the demographic trend of an increasing divorce rate for older (“grey-haired”) couples in what had been long-lasting marriages. A very public example of this was Tipper and Al Gore’s decision to divorce after 40 years of marriage.  Although the reason for this phenomenon is disputed, there is no doubt this is occurring not only here in the United States but also abroad.  Observers in Japan have deemed it “Retired Husband Syndrome,” brought on when husbands retire and are home with their wives all day for the first time in years, leading one or both spouses to feel like they are living with a virtual stranger.  It is the stress of the change in lifestyle which is one of the cited reasons for an increasing divorce rate among those people over age 50.

In addition to the legal issues which are presented in a grey divorce, it is important for divorcing spouses in this age group to reach out to other professional advisors to ensure their financial future and increasing health issues are addressed.  While the following professionals should be consulted in any divorce, regardless of age, the issues are more acute in the grey divorce.

Estate Planner. Everyone’s estate plan should be reviewed periodically, but especially during and after a divorce.  It is important for two reasons:  first, to ensure that property will be transferred to the desired person, charity or institution upon death; second, to review tax planning in light of one’s age, health and wealth after divorce.  A very important consideration during a divorce is to review and update Advanced Heath Care Directives and Powers of Attorney.  Because spouses in a grey divorce often have failing health, it is important that a trusted person will make critical decisions in the event of hospitalization or incapacity of either spouse.

Insurance Agent. A dependent spouse on a health insurance policy will lose his or her health insurance upon divorce.  For the spouse who will be removed from the insurance policy, it may be difficult and potentially impossible to obtain health insurance due to age, health and pre-existing conditions.  Therefore, long-term care insurance must be considered as a possible alternative to make sure that some benefits toward in-home or residential care can be accessed.  Long-term care insurance should also be considered even when health insurance is available because it is a different benefit than health insurance and is typically a small expense as compared to the cost of home or residential care later in life.

Financial Advisor. For many people over the age of 50, retirement planning is in process and may be even right on target until the time a divorce strikes.  The money saved by the couple is now going to have to support two separate households, often as income is decreasing.  It is critical to consult with a financial advisor to re-evaluate the retirement financial plan for each person individually in light of the division of assets and the payment or receipt of spousal support in connection with the divorce.

Accountant. The accountant’s advice likely will impact the estate plan, insurance decisions and the financial plan.  Accounting advice should be part of the decision-making process throughout the divorce and as part of the revised financial picture post-divorce.  A spouse’s individual accountant can assess the division of assets negotiated in the divorce to maximize tax benefits, explain fully the tax effect of any potential settlement, and advise how estate taxes will impact their situations upon death after the divorce.

The best practice for anyone preparing to divorce is to consult with professional advisors as suggested above.  In the grey divorce, due to increasing age, often declining health, loss of income due to retirement or disability and statistically the greater chance of death, the issues are especially immediate.  Therefore, engaging a good team of professionals to put your financial life in order as soon as possible is critical.