settlement

Women tend to face a variety of unique financial challenges when separating from a partner. When it comes to successfully navigating gray divorce, preparation and the right team of advisors are key.

Divorce over age 50—commonly referred to as “gray divorce”—is becoming increasingly common in the United States. Although the overall divorce rate has been declining since the 1990s, there’s been an upward trend in gray divorces over the same period, according to the U.S. Census Bureau.

No one gets married with the intention of divorcing. Yet the reality is that divorce happens—and it happens more often than we’d like to admit. And while divorce can be devastating at any age, the financial consequences for those who divorce later in life tend to be far worse for women than for men.

If you’re a woman navigating gray divorce, protecting yourself financially is critical. Here are a few tips to help you obtain an equitable settlement and maintain your financial independence post-divorce.

When it comes to navigating gray divorce, consider the following tips:

#1: Get Organized

Data shows that the average person spends two years thinking about divorce before taking action. If you’re considering divorce, be sure to familiarize yourself with the household finances. This is especially important if you’ve let your spouse take the lead for most of your adult life.

On the other hand, if your spouse is considering divorce, you may not have ample time to prepare. But if you sense any shift in your marriage, getting financially organized can’t hurt—even if divorce never comes to fruition. Indeed, researchers estimate that 90% of all women will be solely responsible for their household finances at some point in their lives.

Here are a few organizational tips for navigating gray divorce and taking charge of your financial life:

• Keep a record of all financial accounts, property, and other assets owned by you and your partner. You should also classify all assets as separate or marital property.
• Be sure to save copies of all corresponding documents so they’re readily available if you need them.
• Do your best to locate all estate planning documents, prepaid funeral arrangements, and premarital agreements, if applicable.  

Other examples of information you may need during the divorce process may include:

• Personal balance sheet/financial statements
• Inventory of joint and separate property
• Bank and investment account statements
• Real estate deeds
• Mortgage/loan documents
• Credit card statements
• Wills/trusts
• Insurance policies

In addition, keep track of your login credentials for online access to all relevant financial accounts and information. Creating an organizational system in advance can help make the process easier for you and your team of advisors if you find yourself navigating gray divorce.

#2: Assemble Your Team of Experts

Once divorce is on the table, you’ll want to begin assembling a team of legal and financial experts. Many people immediately tap their network for help once navigating gray divorce becomes their reality. However, taking your time to carefully select a team of experts can ultimately save you time, money, and unnecessary stress.

As you assemble your team of advisors, consider the following specialists:

• A divorce attorney or mediator to help you navigate the legal aspects of divorce and advocate on your behalf.
• A Certified Divorce Financial Analyst (CDFA) who can help you gather and document household financial details, as well as determine a fair division of assets.
• An estate planning attorney, especially if you have young children. You’ll need to recreate all relevant estate planning documents after you divorce.
• A divorce coach or therapist to help you navigate the emotional aspects of divorce.

If you don’t have recent appraisals for real estate and other highly valued property, be sure to obtain your own professional appraisals. In addition, consider adding a financial planner or tax professional to your team to help you determine the tax consequences of various settlement scenarios.

Finally, beware of the unpleasant possibility that your partner may try to hide assets from you during the divorce process. Finding hidden assets can be challenging, but it’s not impossible.

If there’s no obvious paper trail, past tax returns can be a helpful place to start. Alternatively, if you suspect your partner may be hiding a substantial amount of money or property from you, you may want to consider hiring a professional who specializes in asset search and investigation. 

#3: Choose Your Divorce Process

There’s no one-size-fits-all approach to divorce. The best approach typically depends on your family dynamics, as well as your personal and financial circumstances. Nevertheless, you typically have four options when it comes to navigating gray divorce.

• Do It Yourself. With this approach, you and your spouse work out the details of your divorce without the assistance of legal advisors and other experts. A DIY approach may save you time and legal fees if you and your spouse are divorcing amicably. However, you may also leave yourself open to an unfair settlement, since you don’t know what you don’t know.
• Traditional Representation. You can retain an attorney for the length of your divorce or hire a consulting attorney to assist you when necessary. With either option, you’re at the mercy of the law and the court system. This can be time-consuming and expensive. But it can also protect you if the divorce is complicated and/or contentious.
• Mediation. With this approach, you have a neutral facilitator—typically an attorney who specializes in family law. Their only role is to listen and make sure both parties are heard. That means they can’t advise on financial matters related to navigating gray divorce. This may be problematic if there’s a power imbalance or one party isn’t acting in good faith.
• Collaboration. Rather than a winner versus loser approach to divorce, collaboration aims to troubleshoot and problem-solve. Importantly, both parties and their attorneys agree not to litigate. Instead, the teams bring in whoever is needed to help make the process run as smoothly as possible. If either party goes back on their agreement, the party who litigates must find new counsel.

A Trusted Advisor Can Help You Take Ownership of Your Finances After Navigating Gray Divorce

Unfortunately, navigating gray divorce doesn’t end once the divorce proceedings conclude. As you adjust to your new life, it’s important to take ownership of your finances so you can thrive independently.

It’s possible that your divorce settlement may be all you need to sustain your lifestyle post-divorce. Nevertheless, you’ll want to develop a personal budget and long-term financial plan that reflect your new circumstances.

Additional post-divorce considerations may include:

• Social Security benefits. If you’re divorced but your marriage lasted at least 10 years, you can still collect benefits on your ex-spouse’s record. This is true even if they have remarried, but not if you remarry.
• Insurance needs. The two primary types of insurance that typically come into play during a divorce are health insurance and life insurance. Be sure to revisit your policies and ensure you have proper coverage post-divorce.

Lastly, if you haven’t worked with a financial planner in the past—or your partner took the lead in the family finances—consider engaging a trusted financial advisor. Your advisor can help you take control of your finances, identify your blind spots, and secure your future.

If you’re navigating gray divorce and looking for a financial partner to help you maintain your financial independence and make smart decisions for your future, Curtis Financial Planning may be able to help. To see if we’re a good fit, please start here.