Divorce among couples nearing or beyond retirement age has its own challenges. And while no two divorce cases are the same, there are common issues that become most important in “gray divorce” — below, the lawyers of FORESTER PURCELL STOWELL PC shed some light on these gray areas.

 

What special considerations arise for divorcing parties in midlife and older?

 

Neil M.E. Forester Family Law AttorneyNEIL FORESTER

Spousal support is a major issue for older people contemplating a late in life divorce. California courts will consider reaching retirement age (65 typically) as a “material change in circumstance” in relation to a person’s obligation to continue working. When the income stops coming in, spousal support will be decreased significantly or terminated altogether. I recently counseled a client in that very situation, and advised her to seek out a financial planner to ensure she could make her half of the couple’s retirement — the only real asset they had — stretch as far as it could … because she would not be able to count on receiving much spousal support, if she received any at all. That’s a tough situation for an older person to have to face.

 

Jenny Bain 220 x 220 Website 386JENNY BAIN

The older the parties, the more likely it is that at least one of them has received an inheritance, which means that those funds and any assets acquired with them are separate property. If the parties have commingled those separate funds with community property, this poses tracing issues that require the hiring of forensic experts. If one party has used a significant amount of separate property to acquire assets and can prove it, the other spouse may be unexpectedly left with less property than they thought. This can be devastating for someone later in life who never envisioned most of their assets would be lost in a divorce. This is why it’s crucial to be aware of characterizing property during the marriage, and having those difficult discussions, so that one party isn’t blind-sided in a dissolution.

 

MATT PURCELL

For those going through dissolution later in life, maximizing the parties’ assets, specifically retirement accounts, becomes more important. There is typically more in the retirement accounts to be divided, and in many cases to be characterized as community or separate property. While the general rule is to divide assets equally, dividing retirement accounts, rolling them over, or cashing them out can have dire consequences. This is why people often consider buying the other party out of their pension to avoid having to buy back years of service, or offsetting the retirement value against other assets to avoid touching the account at all.  It is important to have the accounts valued by an expert so that the parties can have all of the specific information to make an informed decision about what is the best way to handle their retirement accounts.

 

MICHELLE STOWELLmichelle-stowell

Under current California law, the spouse who may owe spousal support to the other spouse may only be ordered to work up to age 65. If a spouse is disabled prior to age 65, the high earning spouse may retire prior to that age. This law may work a hardship on an older spouse who has stayed at home during the marriage. If the parties are entering retirement age and have minimal community assets, the non-working spouse may find it difficult to make ends meet as she (more often than not it is the wife) may not receive spousal support for a prolonged period of time. If you are a non-working spouse who relies on your partner for financial support, it is imperative that have assets — such as IRAs, 401(k)s, and equity in a home — in place to see you through your retirement/non-working years.

 

Based in Folsom, California, Forester Purcell Stowell PC can be reached at info@foresterpurcell.com or 916 293 4000. This information is general in nature and should not be construed as legal advice.

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