Silver Splitters: 5 Tips To Consider If Divorcing Over 65
The majority of issues affecting divorcing couples have no relevance to their age whatsoever. Treating divorce as a shared problem, being open and transparent with your financial disclosure and working together to find an outcome which is fair for both of you should be the aims of every separating couple, whatever their age.
However, when we were asked by a media outlet to comment on the statistics relating to those divorcing over 65, we thought it might be helpful to highlight the additional factors which divorcing spouses in that age range should bear in mind. The reason we were approached is because the divorce rate for couples as a whole is falling, but the so-called ‘silver splitter’ contingent buck the trend- the Office for National Statistics has found that the number of couples over the age of 65 getting divorced has significantly increased.
Older generations have specific considerations, in particular with regard to tax and financial planning, which usually do not affect young divorcing couples to the same extent. Here are 5 tips to watch out for:
Tip 1: Pensions, pensions, pensions
It is vitally important to engage with the true value of your pension benefits, and how they can be shared. This applies across all age groups, but in those approaching or in retirement the pension values are likely to be at a lifetime high and possibly also in payment, an added complicating factor.
The reality is that for many years pensions have not been given the attention they deserve. A survey of all court financial orders on divorce found that only 14% contained any reference at all to pensions, a shocking statistic which led to the formation of the Pensions Advisory Group, chaired by Mr Justice Francis and His Honour Judge Edward Hess. The report they published is lengthy, thorough, and is required reading for all matrimonial finance lawyers. You can read it here.
The key take away is this: you are very likely to need an actuary to report on how best to divide your pension assets. The Cash Equivalent Value of your pension (which you are required to obtain as part of your financial disclosure) is not a value which will necessarily reflect the actual benefits you receive from that pension. There are so many complicating factors: the type of pension you have (defined benefit vs defined contribution), any tax free lump sums available, when you can draw down, your lifetime allowance, whether part of the pension pre-dates the marriage, your respective ages, entitlements to basic state pension (which cannot be shared), etc.
Happily, this type of joint instruction is a piece of work actuaries are well used to and will often do for a fixed fee. At The Divorce Surgery, we always advise on pensions, and where reports from actuaries are required (which they are in the large majority of cases) we help you instruct the right actuary to get the job done.
Tip 2: Budgeting
Again this is a vital piece of work at any age, but a detailed forensic future budget is particularly crucial for divorcing couples when the reality may well be that neither will earn in the future. There is no fail-safe, and what assets and savings there are need to be carefully managed to ensure life-long stability.
Budgeting is boring and detail driven, but it is so important to ensure that once you get to the other side of divorce you can adequately meet your needs. Capitalisation of maintenance (so a lump sum payable upfront rather than a monthly maintenance payment) often crops up in the retiring or retired generations. Again, make sure the rate of return which is being assumed in that calculation is a realistic one.
At The Divorce Surgery we work with our couples and bring in impartial external financial expertise where necessary to address these issues. Many points of contention in a divorce around budgeting don’t actually concern the law, but rather stem from couples getting separate, and different, financial advice. By sitting round the table together with an impartial barrister and an impartial financial expert, we find many of these bones of contention simply do not arise because we are all working on the same page.
Tip 3: Adult children living at home
Many adult children are still living at home. This is the product, sadly, of soaring house prices and stagnant wage growth. It can cause a real headache for both spouses on divorce.
Once a child has grown up and completed tertiary education, their needs do not form part of the Court’s consideration, and there is no entitlement to child maintenance. For some couples the financial reality of funding two homes instead of one means they simply cannot afford to continue maintaining an adult child at home, without it significantly and unfairly impacting the quality of life of the spouse taking on that ongoing burden.
This can be a hugely sensitive topic, and needs to be approached very carefully. In our experience, many of the considerations about co-parenting apply as much to adult children as they do to young children. It is so important not to allow your children to pick sides, or become involved in any conflict. The best way to communicate with your adult children is to put on a united front, hard as that may seem. And the best way to achieve a united front is to engage with the financial issues together, and communicate about them, at the earliest stage. If the financial reality is that an adult child may need to move out, if you approach that topic together and with the agreed figures to hand, it is much more likely to be a successful transition you all navigate together. If, however, one spouse presents the other and the adult child with a fait accompli, it can cause damage which can be very hard to repair.
Tip 4: Paying for your children’s divorce
Increasingly, and particularly in our private practices, Harry and I see husbands or wives whose parents are funding their legal fees. Often this is depleting much needed retirement savings, but stems from the fact that legal fees rack up quickly, and the adversarial process and hourly rates make it impossible to predict in advance how high fees will get, or how to cap them.
If you are a parent in that situation do take stock at the earliest stage. The legal process may seem full of jargon and impenetrable at times, but at its core it is just a professional service, and one which you are paying for. Ensure you are fully informed at each stage, as to why a particular step is necessary and how much is likely to cost. Rigorously analyse why costs are increasing, whether correspondence is necessary (you will be charged for each letter or phone call), and at every stage why settlement discussions have not yet begun, or concluded.
As it is not your divorce, you should hopefully be able to stand back, and take an objective viewpoint in a way your son or daughter may not be able to do. We covered some of these points in our recent blog – How to help your friends divorce well.
What is the overall aim? In every case, that can be answered very simply: to reach an outcome which is fair for both spouses and their children. Encourage the couple to engage with services outside the adversarial process, and which can fast-track them to that answer. One Couple One Lawyer services, such as the one we offer at The Divorce Surgery, enable couples to instruct one impartial barrister who advises them both, together, as to what a Court would consider fair. The process is swift, taking only 6-8 weeks and for a fixed cost. We regularly get clients who have started down the adversarial route and need our help to find a mutually acceptable way out.
If you are holding the purse strings, you have some influence. Use it carefully, and wisely, to steer the couple in the direction of a settlement not a battle.
Tip 5: Finding hope and being kind
In the retired demographic more than any other, a couple’s reaction to divorce can be extremely polarised. If it is your choice to divorce, it can feel like a new lease of life, and it can be hard to hide your relief and excitement about the next chapter.
But if you didn’t choose to separate, the reality can completely deflate you. At a time when your children have left home, it can also feel very isolating. If that is you, know that those feelings are extremely common and will pass. Get support. Friends are great, but that may not be enough. For many clients a divorce or life coach can be an absolute life-line, giving the impartial emotional support you need to find the hope and joy in this next chapter, and embrace the opportunities it brings. At The Divorce Surgery we regularly bring in non-legal professional support where clients need it.
And if you wanted the divorce, and are frustrated at the slow progress, be kind and be patient. You’ve had a lot longer to process this. By giving a little time at this stage for emotions to subside, you are much more likely to be able to negotiate calmly and together about the right financial and legal outcome for you both.
If you have more questions about this topic or any other legal issues arising on divorce or separation, please do get in touch as we are always happy to help. You can call us on 0203 488 4475 or email contact@thedivorcesurgery.co.
Author Name: Editor
Published content by The Divorce Surgery Editorial Team.
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