Recent celebrity divorces brought attention to the complexities that wealthier and older couples face when they end their marriage. Couples over 50 should be prepared to face the different challenges of a high-asset divorce.
Gray divorce
This term is used to cover couples who are in their 50s, 60s and 70s who undergo divorce. These couples usually have commingled assets and social relationships spanning many years.
For many couples over 50, only one spouse has extensive knowledge of their finances. This is typically the male spouse and puts the woman at a severe disadvantage during divorce. High-net worth spouses, especially in these age groups, should learn about their financial situation including their assets and expenses.
Spouses must inventory their assets and their location. These assets include brokerage accounts, bank accounts and annuities, and real estate investments.
Over many years, assets become intertwined. Spouses should try to catalog and inventory assets they had before marriage including gifts or inheritances.
Prenuptial agreements
Planning can begin before marriage. At the very least, spouses should determine and record their property and debt.
Engaged couples can learn about their assets and take part in financial planning by executing a prenuptial agreement before their marriage. A prenuptial agreement covers how the couple’s assets will be allocated if there is ever a divorce. These agreements are also important in second marriages to protect the assets of children from earlier relationships.
These agreements can address the needs of a surviving spouse if there is a death. Couples who did not enter these agreements before their marriage can sign a post-nuptial agreement.
Divorce planning
To avoid surprises in a divorce, spouses need to create a financial plan so they can seek a settlement that covers their financial needs. They should also take extra precautions in their estate planning concerning inheritances and separate property treatment.
Life after marriage
Preparing for divorce requires an objective look at what is possible in a settlement and a realistic standard of living after divorce. This includes considering investments in the stock market for growth instead of safer choices such as certificates of deposit, money market or cash. Spouses might have to restrict gifts and charitable contributions.
Couples may also have to deal with changing friendships that lasted many years. Family members sometimes take sides.
Attorneys can help spouses consider and develop options that meet their financial and legal needs. They can pursue and their interests in negotiations and proceedings.
