En español | Couples divorcing after age 50 can face unique financial challenges related to everything from estate planning to Social Security benefits for ex-spouses. The more assets and debts accumulated over a long marriage, the more complicated the legal breakup. To help guide 50-plus couples through this financial maze, here are five more tips on late-life divorce from Janice Green, a family attorney and author of Divorce After 50: Your Guide to the Unique Legal & Financial Challenges.
1. How do you prepare for postdivorce living expenses?
The starting point is an accurate list of necessary and discretionary living expenses. You must know how much income you'll need — whether alimony, passive income from assets, note payments between spouses or employment. With less time to bounce back from the economic upheaval associated with divorce, accurate budgetary projections are crucial in the gray divorce.
I urge clients to work on this task over several days after all the financial records needed are available to them. They are also encouraged to work with a financial professional or financially savvy friend or family member who can challenge their assumptions and categories of expenditures. Doing so is cost effective and produces a more precise outcome.
2. Is estate planning relevant in a late-life divorce?
Yes, definitely. Think about estate planning at three points in time: before, during and after a divorce.
Before, you may have insurance beneficiaries, will beneficiaries or powers of attorney that benefit the other spouse or that name the other spouse to a fiduciary role such as an executor. Before filing for divorce, you may want to make changes. Sometimes changes are prohibited after a divorce is filed, so check with your attorney. You may not want your soon-to-be-ex-spouse to have powers under a health care or general power of attorney — especially not when there is a lot of conflict and life/death decisions are at stake.
During a divorce, estate plans can be a relevant part of a property settlement agreement. Sometimes, longtime spouses agree to create trusts for each other or have will provisions that benefit the other spouse — even after the divorce. For example, the couple may agree to set aside funds in a trust to pay for a spouse to go back to school to retool for the workplace. If the spouse decides not to go back to school for some reason, then that money is not lost. It can revert back to the first spouse or be used for other purposes. Also, it is important for the divorce attorney to review estate-planning documents created before the divorce, because you may have taken action that limits what you can do with certain property during a divorce.
After a divorce, you want to re-execute wills, etc. In most states, former spouses are automatically excluded from serving as trustees or estate administrators or from receiving under your will. So you want your wills and any living trusts to be in compliance with what you agree to in your divorce. I tell clients that they should not consider their divorce finished until they've revised their will and estate plan.
3. Financial survival after a divorce is a big concern. What suggestions do you have to achieve that?
This issue is the primary reason divorce clients in this age group have a level of anxiety and concern that's off the charts — or so I've observed. They know the financial stakes are high. Here are some suggestions:
• Immediately begin exploring your options for health insurance coverage; this is one of the biggest concerns and biggest budget items, especially for those who fall in the 50 to 65 age range.
• Project accurate living expense needs for postdivorce.
• Consider asking your attorney to consult with a financial planner during divorce.
• Be aware of your own tolerance for risk.
• Accept that your lifestyle may change. Some people simply have to return to the workplace or work for a longer time. I've seen many clients be entrepreneurial and resilient. They "grab their bootstraps" and live happy and productive lives.
4. You hear a lot about how expensive divorces can be. Can you give any tips to keeping down the cost of divorce?
Yes. Even if you think you and your spouse have a tentative agreement and you think you can handle all the paperwork, pay for a consultation with a divorce attorney (preferably one who specializes in divorce, family law and matrimonial law). The earlier, the better. This is an information gathering mission where you learn what laws apply to your situation. You will find out what, if any, bumps to avoid in your road.
If you have a simple estate, you may opt for "unbundled legal services" or what's also called "limited legal representation." This is where you hire an attorney to perform only specific tasks, not full monthly representation. For example, you and your spouse may end up working with a mediator to resolve your differences and only need attorneys to prepare or review the final divorce documents.
Another example of limited legal representation is called "collaborative law." This is an alternative to a litigated divorce. It's not for every case, but it is a terrific option for many. The attorneys are prohibited from representing the spouses in court. They and the clients work toward an agreement through a style of negotiation called interest-based negotiating, which is different from the positional bargaining that occurs in most litigated divorces. The collaborative process may keep down the costs and lead to a more civil relationship with your spouse afterward — important when children of any age are involved.
Choose divorce counsel wisely. It may not be the same lawyer your best friend used because your case is probably very different. Have a clear fee agreement upfront. Insist on timely billings. And ask to do as much of the background work as is possible: gathering financial records, calculating living expenses.
5. What single tip is a must for people to know before they embark on a divorce later in life?
Hold off making agreements before you are fully informed. Even though you may agree to something and you know you can change your mind about it, don't set up that expectation. By negotiating too early, you may create barriers and expectations that make later negotiations more difficult. Spouses need to be on an even playing field with both knowing what they have and what their range of options are. That will save money and heartache down the road.
Janice Green, a fellow in the American Academy of Matrimonial Lawyers, has been a practicing family law attorney in Texas for more than 30 years. She's the author of Divorce After 50: Your Guide to the Unique Legal & Financial Challenges. This article is reprinted by permission of the author.