Gray Divorces and Silver Separations Present Special Challenges
This column was originally published in the Grand Rapids Business Journal on August 5, 2016 and is republished with permission.
Let's hear it one more time for those of us in the "Baby Boom" generation -- Americans born between roughly 1946 and 1964.
Once again, we've come up with something new and all about us. It's called "the Gray Divorce."
Used to reference the series of noteworthy legal events occurring when couples end marriages after the age of 50, the term "Gray Divorce" denotes not only changes in marital status occurring later in life, but also the myriad of issues faced by the AARP generation that are not always faced by younger couples.
In other words, the so-called Gray Divorce involves much more than simply telling one's spouse, "I shoulda left you way back when I was 40. . . ."
Truth be told, divorce ought seldom be the subject of kidding, regardless of the ages of divorcing couples. At the end of the day, every divorce involves the break up and resolution of the physical and economic partnership formed when a couple marries. Thus each divorce involves an inventory of property, assets, and other things acquired and/or owned by a couple both prior to and during marriage, so that the court can decide the often complicated question of "who leaves with what" when a marriage is legally dissolved.
In bygone times -- when couples who managed to stay together for 30 years would often remain married forever -- issues that now regularly occur when couples divorce after age 50 were few and far between.
But times change. People live longer. Sometimes more familiarity breeds more contempt.
Today, one in four people currently experiencing divorce is over 50, which is double the rate of just 20 years ago. And while divorcing 55-year-olds may not have to battle over child custody in the way that 30-year-old couples might battle, there are many issues to be determined that were analyzed far less frequently back when "Silver Separations" were less common.
Dividing up Property
When considering divorce later in life, many people first ask, "Will I end up with enough to live comfortably?" While courts start at a roughly equal division, several factors influence the final division.
- Prenup? The existence of a prenuptial agreement can alter how an estate gets divided. Many who had assets -- or expected to inherit assets -- utilized a prenup to spell out how property would be split. Even with a prenup, particularly one drafted years ago, the analysis continues. Courts may try to "invade" the otherwise separate property of one spouse to get to a division the judge prefers. The old saying that "the devil is in the details" squarely applies here.
- Separate versus marital property. A judge's first job in carving up property is to determine what is "marital" and what is "separate." Separate property could include assets a party brought into the marriage or that a party received through gift or inheritance during the marriage. Conversely, property that comes to the marriage either by reason of the marriage or because it is earned during the marriage belongs to the marriage. Of course, in the murky waters of the law, it is simply not that clear. Property that one party says is "definitely mine" can, through the often unintended actions of the parties themselves, change to martial. Titling an inherited asset jointly, such as for estate planning, depositing funds into a joint account, or paying income taxes or insurance premiums from joint funds can all cause the once separate asset to be "comingled" with, and turned into, marital property. Similarly, parties can contribute to appreciation of the separate asset, even via labor, which could affect the category into which the court places the property. But let's not stop there. Michigan courts have authority by statute to award one party's separate property to the other. One statute deals with a party's contribution to the asset as described above, and another allows invasion if the court simply feels the martial settlement to a party is "insufficient for suitable support".
- What can be divided? The universe of property to divide includes the usual suspects such as real estate, business interests, financial and retirement accounts and "stuff," like household goods. Other less obvious things that could be divided include deferred comp plans, banked vacation time, frequent flyer miles, lifetime health benefits, workers comp benefits, escrow funds, pre-paid end-of-life arrangements, season tickets (ouch UofM fans), patents, voting rights, professional degrees, life estates, rights of first refusal, referral fees, and litigation rights. In short, people will argue about, and the court can consider, anything that has an ascertainable value. The court allocates debts as well.
- What's it worth? Valuation of property is another big issue. Many older folks have significant retirement benefits, vehicles and homes, antiques or artworks, and closely held business interests. All must be valued in a divorce, and the burden of establishing value rests on the shoulders of the party who wants it divided. Hiring a qualified valuation expert is an absolute must. Since these people don't come cheap, this can significantly add to the case expense. The assumptions utilized in making value calculations, can also cause a significant difference in value. For example, is the business worth the $850,000 that one expert suggests, or $8,500,000 as indicated by the other? Predictably, bigger numbers mean bigger arguments.
Another major issue often present in later life breakups is spousal support. Will I pay or receive support is a question many people ask. Here, Courts will look at several factors.
- Need versus ability to pay. If one spouse was typically stay-at-home, and the other generated significant income, support is likely. If the breadwinner is now retired, but pulls in more money -- such as SS benefits, retirement, and interest -- than the other, support is probable.
- Property each receives. In the larger estates of the older set, it is more likely that each party receives sizable property awards that may generate sizeable incomes. The court will see what income a party may receive to determine whether to award support.
- Health. A party’s special health costs can also influence the court. The costs of prescriptions, treatments and care givers may be issues in later life divorce cases.
Divorce for the baby boomer generation, while excluding all the kid issues of younger couples, presents certain unique legal challenges. These can be more significant than "who gets the house?"
A lawyer with proper information, knowledge of the law, and an understanding of the attitudes of opposing counsel and the judge can advance a client's cause so that a fair and equitable result occurs.
A divorcing person can help his or her own cause considerably by providing the lawyer with a complete, accurate, and current list of assets, liabilities, and income, supplemented by reliable documents. The lawyer is no better than the facts to be dealt with, and the sooner the lawyer has sufficient information the better the chances for a favorable result.
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