Considering a divorce later on in life?
Grey divorce is on the rise
2020 has seen many couples stretched to breaking point, with the Covid-19 crisis putting a strain on relationships with increasing money worries compounded by couples forced into spending far more time together. The result has been a growing number of people realising their marriage or relationship is over, and this is not just a phenomenon for younger couples, the rate of late life (grey divorce) divorce is also on the rise.
Divorce at any stage of life can be challenging but can be both easier – or harder – for those who are older; those in their twilight years (or with retirement on the horizon) face difficulties distinct to from separating young partners, which require consideration and may well be reflected in negotiations and settlements.
Division of assets
The division of assets in a long-term marriage can be much more complex – after all, you have spent much more of your life building your assets – and may well have more to lose. Complicated arguments as to whether assets are deemed matrimonial, or non-matrimonial, become difficult to discern and establish, and it is imperative to get sound comprehensive advice at the outset.
Pensions savings often get overlooked in a settlement with people not considering the financial implications and how that may impact their future retirement. This is understandable, particularly with occupational pensions simply taking a regular slice out of a PAYE payslip, and can go almost unnoticed for entire careers. Key to this issue is the perceived difficulty in disentangling joint assets, and the failure to properly consider the valuations of pensions and the risks, costs and implications of splitting pension pots.
Capital gains tax trap
Divorcing or separating couples have a short window of opportunity in which to pass or sell any matrimonial investments before Capital Gains Tax (CGT) applies and a potential CGT bill that you may struggle to afford when dividing finances between two households. Older couples are far more likely to have more investments and so are more vulnerable to CGT.
Inheritance and estate planning
Monies or assets inherited or gifted before or during your marriage are not automatically excluded from the matrimonial financial “pot”. This can have consequences for any money you intend to leave or gift to adult children.
If you expect to inherit money or assets in the future, you should also consider appropriate trust planning, which can help to protect legacies in certain circumstances.
What is often overlooked is the provisions that need to be put into place for children; there is a misconception that all children at 18 are no longer seen as a priority for children once they hit 18 years of age, which often in not the case and can become a significant bone of contention.
Post-settlement and future finances
Not only does a divorce split assets and cost in the process, but there will also be new future financial needs and not much time to build up assets again. Some people will also have to consider investments, pension planning, tax and other financial considerations for the first time which can be intimidating for some, as well as equity release in some cases. Careful financial planning should be put at the forefront of a party’s mind when negotiating a settlement.
Getting the right support
When considering divorce or separation, getting the right support and expertise at this time could be one of the best financial decisions you make.
Our in-house team of tax, business and finance experts fully understand the needs and challenges faced by clients during a relationship breakdown. We deliver bespoke, seamless and transparent advice to make things as easiest as possible for you, helping you to make well-informed choices that protect your long-term financial needs.
If you would like to speak to someone in more detail regarding a cohabitation agreement, or get advice on your circumstances and legal rights, please contact the Family team at Calibrate Law – firstname.lastname@example.org
This post is intended to be a brief note for clients and other interested parties. The information is believed to be correct at the date of publication but should not be relied upon as a substitute for professional advice.