The number of people divorcing later in life is on the rise. While there is no single reason for the increasing divorce rates for over-50s, some observers have suggested that a contributing factor is the fact that people are generally living longer after they retire. Consequently, many couples facing problems are choosing to divorce rather than spend their later years in an unhappy marriage.
It has also been highlighted that many women over 50 will have built their own careers and spent much of their married life working. This affords them a far higher degree of financial independence – they are not reliant on their husbands in the same way as previous generations were and will have their own pensions.
Whatever your situation, if you are considering a divorce later in life, there are many important factors to consider. Here, our specialist divorce solicitors highlight some of the crucial issues that you should think about when divorcing over 50.
Understand how your pension will be affected
When you get divorced, your pension may well be the most significant asset after your family home. A pension can be divided several ways, so it is vital that you take the time to understand your options before deciding what to do. Pension arrangements can be complicated, so advice from an experienced divorce lawyer will be beneficial.
As a first step, you should list the different pensions that you and your spouse have and obtain a copy of the rules for each one. This might include:
- Pensions schemes through your employer
- Your personal pension
- An additional state pension (this is different from your basic state pension)
There are a variety of ways that pensions can be dealt with following a divorce, including pension offsetting, pension attachment orders and pension sharing orders. Even if you have instructed a divorce solicitor, you may still need to seek advice from other financial experts depending on the complexity of your pension arrangements. An actuary or financial advisor who specialises in divorce will be able to assist you.
Pension changes introduced in 2015 mean that men and women over 55 have greater access to their pension pots. This means that, if you divorce after 50, you may have access to much-needed cash, for example, to buy a house after you move out of the family home. However, you will need to be aware of the tax implications that can arise as a result of withdrawing more than 25% of your pension fund (a lump sum of up to 25% can be withdrawn tax-free). Again, seeking expert advice is recommended.
Finally, you need to be aware that the rules on how pensions can be split apply differently if you or your spouse are already retired. Essentially, you cannot take a lump sum from your spouse’s pension if they are already receiving an income from it.
Spousal maintenance can be a significant issue for those getting divorced later in life because of the factors the court must consider when making an award. This includes the length of time the couple has been married, the age of each spouse and the income and property each of the spouses has or is likely to have in the foreseeable future.
Both parties must receive independent legal advice regarding financial arrangements after divorce. The financially stronger party can face the prospect of paying maintenance to the other for the rest of their life, or until they remarry. However, there is scope for seeking a 'clean break order' if this can realistically be achieved. A clean break order cuts all financial ties between you and your former spouse and protects your future assets from claims.
Update your Will
You must update your Will as soon as you decide to divorce. If you fail to do so, and anything happens to you before the final decree of divorce, your existing Will is still valid, and your assets will be distributed as if you were still married.
If you do not have a Will, you should have one drafted. When someone dies without leaving a Will, a special set of default rules, called the Rules of Intestacy, are used to decide how your money, property and other assets will be shared out. This can mean that your former spouse can still benefit, even though you are no longer together.
Once the divorce has been finalised, and the Decree Absolute has been granted, your former spouse will no longer be entitled to claim under your previous Will or the Rules of Intestacy. If financial issues have not been resolved, however, your ex-spouse may still be able to make a claim against your estate under the Inheritance Act.
Understand the consequences of remarrying
If you remarry, any spousal maintenance that you have been awarded will end. Remarrying also revokes any Will that you have made during the time that you were married. Where financial issues have not been resolved, remarriage can sometimes prevent you from making a claim against your ex-spouse. As such, you should obtain legal advice if you find yourself in this position.
Cohabiting with a new partner will not result in spousal maintenance being stopped, although a financial settlement may state that maintenance will end after a prescribed period of cohabitation. If financial matters have not been finalised, cohabitation with a new partner would be considered when it comes to deciding what level of support is appropriate.
Older couples can lose various tax advantages on divorce, particularly in respect of Inheritance Tax. The unlimited spouse exemption when transferring property does not apply after divorce. As a result, it is essential that separating couples deal with all financial issues before the conclusion of their divorce.