Mature-aged decoupling is traumatic enough without having to weigh up the impact it could have on each person to the partnership’s now independent retirement plan, a lawyer has flagged.
Hetherington Family Law principal Jennifer Hetherington said that she has seen a “noticeable trend for older couples – the grandparent generation – to separate” and this is causing serious financial hardship and its own set of challenges, which she referred to as a “grey divorce”.
“With grey divorces, you have this unusual transition where a couple changes from having a joint objective for their finances and assets to effectively two individuals trying to carve up a lifetime’s accumulation of assets and make a fresh start,” she explained.
According to the family law specialist, in many of the cases, the divorce trend comes about from couples growing apart and questioning whether they want to stay together after the children have left home rather than because of sexual affairs or acrimony reasons.
“At an age where they may be expecting to coast to retirement, sometimes unexpected factors lead to divorce,” she offered, listing off longer life expectancy, the popularity of remarriage, more financial autonomy for women and changing views of marriage as some of the other reasons.
She explained that most couples over 50 have been working out a retirement plan, which relies on two people in one household and often means that “older couples often have significant financial assets that pose challenges for both the divorcing couples and their financial advisers”.
The reality is “that separation at whatever age can be traumatic, and the divorce process poses unique challenges, not least of which can surround a couple’s assets and superannuation”, the lawyer commented.
Family lawyers and financial advisers
According to Ms Hetherington, “The process of divorce for older couples needs to have an additional layer to help them transition to a post-marriage single life.”
She said older people are not always as flexible or adaptable as younger people leaving a marriage.
From her legal perspective, Ms Hetherington considered that “we also have to look at retirement and make sure both husband and wife will be able to survive into their golden years”.
She cited the importance of couples “working with a good financial planner who understands retirement strategies, helps us make sure that a property division is structured in the most tax-effective way, to maximise cash flow for both parties”.
“There is no point in one spouse keeping a huge amount of superannuation they can’t access for another 10 years, if the other one could access it now,” she outlined.
Ms Hetherington noted that in her role as a lawyer, superannuation splitting laws can be used “to effectively release super and turn it into cash now”.
“[It] can be really important when you suddenly need two homes instead of one, and you can’t just go to the bank to get a mortgage,” the lawyer said.
Unequal impact
While a “grey divorce” can have significant impacts on each spouse’s retirement plan, Ms Hetherington flagged that “unfortunately, research has shown that grey divorce can take a particularly serious financial toll on older women”.
In relationships where women focused on raising the children while the husband had a job, women going through a divorce might suddenly find themselves in a legal fight for their share of the property.
A woman of 60 is only about two-thirds of the way through her life, the lawyer stated, meaning that any money she receives in a property settlement might need to last 25 or more years.
Ms Hetherington also considered that it’s also not uncommon “to find women for whom their husband always handled all the finances and suddenly they are faced with trying to start over again or, worse, deal with someone who tries to hide money or assets”.
She said she encounters many women who have no idea of the family finances as they left it all to their husband, as they trusted him to do the right thing.
“There’s nothing wrong with that – when people are married for a long time, they each take on their own roles in the relationship and it doesn’t mean to say that the husband has hidden anything– but we have to get information to know what the situation is.”
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