Dividing Assets in a Gray Divorce

When an older couple dissolves their marriage, it is commonly known as a “gray divorce.” While the age of the parties makes no difference legally, there are unique challenges and circumstances for divorcing spouses age 50 and above. Older couples tend to have more assets and no dependent children. Therefore, gray divorces usually focus on property distribution and inter-generational wealth transfers.

While the divorce rate has fallen in the U.S., the number of gray divorces has risen. Reasons for this range from lifestyle changes after retirement, difficulty adjusting to an empty home after children become independent to simply falling out love. 

Some of the more common asset division concerns for older couples getting divorced include:

• Pensions/retirement accounts — Older people generally have higher value pensions and retirement accounts, such as 401Ks, 403Bs, IRAs, etc. Before separation and divorce, the spouses usually name one another as the asset beneficiary in the event that the account holder dies. These need to be reviewed and the beneficiaries changed accordingly. If any of these accounts need to be divided, a qualified domestic relation order (QDRO) will have to be obtained to avoid early withdrawal penalties.
• Life insurance/bank accounts — Gray divorces often involve significant term life and/or whole life insurance policies and bank accounts. The beneficiaries of these life insurance and pay on death (POD) accounts must be changed before the marriage is dissolved. In some cases, the parties may find it necessary or appropriate to cash out certain life insurance policies when the marriage ends. 
• Real property — In addition to a primary residence, some older couples who have had decades to build their wealth also own second homes, vacation homes and rental properties. The distribution of real estate can greatly impact each party’s post-divorce assets and/or income going forward. Therefore, gray divorces often involve detailed appraisals of all real estate in the couple’s portfolio.
• Spousal maintenance — The amount and duration of monetary support one spouse might receive from the other is driven by two major factors: the level of the recipient’s dependency on the other spouse and the length of the marriage. A spouse getting divorced after decades of marriage could have dedicated years to raising their children or running the household, effectively giving up their own career to take care of the family. After a divorce, they could have limited prospects for employment, especially the closer they are to retirement age. In such a scenario, the financially dependent spouse would likely get significant alimony from the career spouse. 

Florida is an equitable distribution state, meaning property is divided based on what the judge believes is fair. This does not always mean it will be an equal 50/50 spilt. Therefore, anyone seeking a divorce should be sure that all assets are fully inventoried and properly valued during the dissolution process.

Located in Orlando, the firm of Timothy W. Terry, Attorney at Law is one of central Florida’s most respected family law firms. If you are seeking a divorce or legal separation later in life, feel free to call 407-567-0406 or contact my office online for an initial consultation.