The “Gray Divorce” Epidemic – By Jacqueline Harounian, Esq.

Pew research indicates that while the U.S. divorce rate has declined for every other age demographic, it has roughly doubled for adults aged 50+ since the 1990s. This has been dubbed the “Gray Divorce” Epidemic.

There are many more challenging considerations unique to a “gray divorce,” beginning with the division of assets. To start with, older couples usually have more assets.  For couples facing retirement, there are more tax impact issues as well.   For example, a traditional IRA or 401k is taxed when withdrawn or there could be penalties for early withdrawal. The value of the asset on the statement does not account for the true value after it has been tax impacted, which can be an unpleasant surprise upon divorce. Furthermore, most stock and equity investment assets are not liquid, and liquidating these assets can come at a steep price, resulting in long-term capital gains as high as 20%. The tax impact on these assets must be considered when settling a divorce.

Often in a “gray divorce,” one spouse wants to stay in the home, often because of adult children still living at home, and the value of the home has to be determined at the time of the split. In today’s volatile housing market with higher interest rates, negotiations regarding the marital residence can be protracted. This results in a significant risk to the party keeping the home. Homes also have unanticipated upkeep costs, including costly repairs. Ultimately, an emotional attachment to keeping the home could cost that spouse in the long run.

The increase of post-divorce costs of living are also a major factor to consider.  As of this writing, rental housing prices and inflation are higher than normal. Regular living expenses such as utilities, Netflix and insurance premiums are no longer shared by the couple. This increase of each party’s post-divorce standard of living has to be considered when reaching a settlement to determine what the new budget is going to realistically look like.

There are additional financial considerations for “gray divorce” such as the:

• Division of debts
• Difficulties of splitting annuities, hedge funds or private equity holdings
• Valuing a family-owned business or one spouse’s ownership interest in a company
• Premarital savings that have increased in value over the duration of the marriage
• Comingled inheritance
• Valuing and dividing pensions
• Social Security-related benefits
• Payment of maintenance (aka spousal support) by one spouse to the other
• Financial secrets, gambling, paramours, other spending

Maintenance, also known as alimony in other states, is money that the monied spouse pays to the other during/after divorce. The purpose of maintenance is to ensure that supported spouse maintains the same or similar lifestyle they had during the marriage. Maintenance can be paid for a specified duration, for example, 3 years. Maintenance can also be “non-durational” maintenance, also called lifetime maintenance, which will be paid for the duration of the supported spouse’s lifetime. Today, courts rarely award non-durational maintenance, and it is reserved for special circumstances, as when one spouse is much older, unlikely to find employment, or has an illness.

For older couples divorcing, the issue of retirement of the monied spouse will be relevant when determining the duration of the payments. The law has required maintenance to be paid beyond a reasonable retirement age in many cases. The trend in New York is that judges will order maintenance to be paid until the non-monied spouse reaches the age in which they become eligible for full Social Security benefits (66) or other retirement benefits. The reality is that due to a recent increase in life expectancy, a wage-earning spouse could be required to pay maintenance into their 80s.

ABOUT:

Jacqueline Harounian, Esq.

Managing Partner of Wisselman Harounian Family Law

Jacqueline Harounian is a Partner of the Law Firm of Wisselman, Harounian & Associates, P.C. established in 1976, and a recognized leader in the field of matrimonial and family law. Her unique multidisciplinary background, including a graduate degree in Behavioral Forensic Psychology and Family Systems Therapy, enables her to adeptly handle complex divorce, custody and support matters in the Family and Supreme Courts on Long Island and New York City.

516-773-8300

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