Divorcing and Ending a Long Marriage During Retirement

When a marriage ends during retirement, there are emotional, practical and financial implications that may affect you, your adult children, and your grandchildren.

Retirement can bring into focus that your life goals have diverged from your spouse’s, and that relationship problems masked during busy work lives mean the relationship is no longer sustainable.

At Evolve Family Law, our family law solicitors provide expert later-life divorce advice to secure the best outcome for you.

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Divorce in retirement

Statistically, divorce in retirement is on the rise. That is down to:

1. Longer life expectancy.
2. Greater expectations of life in retirement.
3. Experience of financial independence in marriage.
4. Social norms and acceptance of divorce.
5. Different retirement lifestyle choices are available as we live in an age where choices are available.

If you are one of the people referred to in the press as a silver or grey divorcee, your separation or divorce during retirement may be particularly painful if you are blindsided by your spouse’s decision to end the marriage and if you are unsure of the steps you should take.

Navigating the family complexities of separation in later life

Your separation or divorce may affect the whole family. Your adult children and grandchildren may also be impacted because:

1. Your adult children may be living at the family home because they are struggling to buy a house or rent.
2. Your plans to give your adult children money for a house deposit may have to be put on hold or cancelled.
3. You may need to return to work or work for longer, so you will not be available to provide childcare for your grandchildren.
4. If you pay for a grandchild to be privately educated, this may not be sustainable because of the financial impact of the separation.
5. Your adult children may blame you or your spouse for the marriage breakdown and want to restrict their contact with you. This can be particularly hard when you have grandchildren.

At Evolve Family Law, our later-life divorce solicitors understand the broader implications of divorcing in retirement and the sensitive issues that you may be grappling with.

Modern divorce law

Experienced divorce lawyers recall the days when a spouse could object to a divorce or claim there were no grounds for divorce. That’s no longer possible with the introduction of the no-fault divorce law.

In no-fault divorce proceedings, either the husband, the wife, or the couple can file jointly for a divorce on the basis that the marriage has irretrievably broken down. Even if you don’t think the marriage is over, your spouse can still divorce you if they believe that the marriage has irretrievably broken down. It can be challenging to hear that there are very few grounds to contest a divorce.

Divorce or separation agreement

For some couples, divorce is not a priority. When ending a marriage in retirement, there may be financial reasons to remain married while living separately. It may be feasible to reach an amicable financial settlement that can be documented in a separation agreement. That approach will not be possible if you or your spouse wants a share of the other’s pension through a pension share, as a pension provider is only authorised to share a pension if there is a pension sharing order in place. There may be other reasons a divorce may be required, such as remarriage plans or a fear that one spouse is at risk of bankruptcy, so the other spouse needs the security of a financial court order.

A divorce solicitor can talk through the options of starting no-fault divorce proceedings or signing a separation agreement. The decision will depend on your personal preferences, financial situation, and asset structure. It’s best to speak to a specialist family lawyer, as you may think that your estranged husband’s agreement to pay voluntary spousal maintenance under a separation agreement is as good as a pension sharing order achieved through a divorce and pension sharing order. However, there are significant differences between the two options, and one may leave you financially vulnerable.

 Financial considerations of divorce in retirement

There are special financial considerations of divorce in retirement, including:

1. Financial retirement planning was based on your living together with a joint retirement income.
2. Health concerns in later life may impact your housing and income needs and ability to return to paid employment.
3. You may not be able to secure a mortgage if you are unable to rehouse yourselves from the equity in the family home and any investments.
4. Financial decisions, such as early retirement or the purchase of an annuity, may have been made before the decision was taken to separate.
5. Plans long anticipated, such as going on a world cruise or making a lifetime gift to adult children as part of estate planning, may no longer be affordable.

Pensions and pension sharing

Aside from the equity in the family home, your pensions may be your largest asset. You may not have drawn down on all the pensions, or you may have taken your 25% tax free lump sum but chosen not to buy an annuity or to take a regular pension income.

Whatever pension planning decisions you have made, they will need to be reviewed if you separate and divorce. The family court can divide the pensions of married couples in one of three ways:

1. Pension offsetting.
2. Pension attachment order.
3. Pension sharing order.

With pension offsetting, you or your spouse gets other assets to compensate you for not receiving a share of your spouse’s pension. The asset you receive to offset the pension value could be an investment, an increased share in the equity in the family home, or the transfer of the family home into your sole name.

A financial advisor can explain whether cashing in the investment or downsizing from the family home to a smaller property will generate enough capital to provide an income to make pension offsetting a more attractive option than a pension sharing order.

Pension attachment orders are rarely made, as the more flexible pension sharing order has largely replaced them.  With a pension sharing order, a percentage of a pension is allocated to the other spouse, and it becomes their pension. The pension sharing order cannot be revoked or ended. For example, if the spouse inherits money from their extended family or remarries.

Valuing pensions for pension-sharing orders can be complex. Although each pension provider gives an annual cash equivalent transfer value (CETV), the value may be artificially low if you or your spouse is a member of a public sector pension fund when compared to the CETV of a private pension scheme.

Divorce solicitors work with pension actuaries and financial advisors to help you understand your pension options and to ensure you achieve a fair financial settlement.

Estate planning when divorcing during retirement

Whether you divorce in your 30s or 70s, there are some estate planning issues to consider, but in a later-life divorce, the need to address them is more obvious.

Estate planning issues include:

1. Making a new Will.
2. Reassessing any inheritance tax strategies.
3. Signing a new financial Lasting Power of Attorney.
4. Signing a new Health & Welfare Lasting Power of Attorney.
5. Considering life insurance and pension nominations.

A decision to separate results in the need to review existing estate planning documents or to consider writing a Will or signing a Lasting Power of Attorney. These steps should be taken when you decide to separate rather than waiting for the divorce proceedings to be finalised.

Later life divorce solicitors

When considering a later-life divorce, it is best to speak with a family law solicitor experienced in helping individuals navigate the challenges of separation and divorce in retirement.

When your anticipated comfortable retirement is devastated by the commencement of no-fault divorce proceedings, it’s important to get comprehensive family law legal advice on all aspects of your separation, including:

• Financial settlements.
• Pension sharing.
• Housing and income issues after a later-life separation.
• Pension division and how spousal maintenance affects pension sharing.
• Separation agreements.
• Family mediation.
• One lawyer amicable divorce service.
• Converting an agreement reached into a binding financial court order.
• Estate planning updates, including a new Will and Lasting Powers of Attorney.

At Evolve Family Law, we will listen carefully to your concerns, explain your options, outline the legal process and do our utmost to help you reach a negotiated financial settlement so you and your estranged spouse can navigate your retirement after your divorce.

Get in Touch With us Today.