Gray divorce, also known as a late-life divorce, is becoming more common as the Baby Boomer generation ages. Gray divorce refers to the end of a marriage between spouses who are over 50 years of age.
If you’re considering a divorce after years of marriage, there are several unique aspects to a gray divorce that you should know about, including the need to protect retirement assets and how post-nuptial agreements can impact the process.
Retirement assets are usually the biggest concern
Younger couples worry more about child custody, but older couples are past that stage. With the specter of retirement hanging over their heads, it’s the division of the marital assets – especially investments and retirement funds – that takes center stage. Many people who are getting divorced later in life have already accumulated significant retirement savings, such as 401(k)s, IRAs, and pensions. The division of these assets can be complex and may require the assistance of financial professionals.
One way to protect retirement assets in a gray divorce is to work with a financial planner to create a retirement income plan. This plan can help ensure that both spouses are able to maintain their standard of living in retirement, even after the divorce. Another way to protect retirement assets is to use a Qualified Domestic Relations Order (QDRO) to divide retirement accounts. A QDRO is a court order that allows retirement assets to be divided between spouses without incurring taxes or penalties.
A postnuptial agreement can also play a significant role
A postnuptial agreement is a legal agreement between spouses that outlines how assets will be divided in the event of a divorce. These agreements can be particularly useful in gray divorces, where couples may have accumulated significant assets over the course of their marriage or one or both couples own their own business. Before proceeding with a gray divorce, it’s always smart to go through any postmarital agreements that you and your spouse may have so that you’re 100% clear on your rights.
If you’re approaching a gray divorce, working with experienced professionals, including financial planners and tax experts, can help ensure that you navigate the divorce process and come to a fair and equitable resolution.