Divorce is emotionally and financially difficult no matter how long you’ve been married, but it’s especially difficult when it happens later in life. The emotional pain of surviving divorce is great and the financial pain may be worse because you have so little time to rebuild your assets. The grim reality is that 25% of divorces happen after fifty years of age. If you are over fifty and facing a divorce, you need a plan. Here are seven tips to help you survive:
1. Get Help
Whether you litigate or do a Collaborative Divorce, you’ll need guidance. If you decide to do a Collaborative Divorce, your attorney, a neutral financial and a neutral mental health professional are available. If you decide to litigate your divorce, you should engage a financial professional to help you understand your finances.
2. Develop a Budget
Once you have your advisors on board, work out a post-divorce budget that is realistic and ensures a comfortable life style, given the more limited resources you will have. Two households are more expensive than one and the money you saved may not be adequate for the life-style you had planned. You may have to cut corners to guarantee enough funding for retirement and you may have to work longer to make ends meet.
3. Understand Your Finances
Collect a list of all your assets, including home, vehicles, personal property, savings and checking accounts, brokerage accounts, pensions, health benefits, annuities, life insurance, social security and any other financial asset you have. Separate the assets into your separate property (if any) and understand that the remainder will be divided roughly equally between you and your spouse. Make certain you understand the tax consequences of various assets–for example funds in an IRA are not equal to dollars in a savings account because the pension funds will be taxed when they are withdrawn.
4. Where Will You Live?
Decide if you want to keep the family home, sell it to your spouse, of place it on the market. Before you decide to keep the family home, make certain you understand the costs involved, including paying your spouse half the equity in the home, and monthly costs such as mortgage, taxes, utilities, maintenance and a gardener. It’s rarely smart to keep a large house for one person. Consider downsizing to a townhouse or a condominium.
5. Health and Mobility
An unexpected difficulty of gray divorce is that you won’t have a spouse to care for you as you age. You will need to plan for current health costs and long term assisted living when you can’t live alone.
6. Stay in Touch with Family
If you have adult children make certain you stay in touch with them. They can be a source of comfort, entertainment and support. But, don’t put them in the middle of your divorce because they will resent it and may not want to see either of you.
7. See a Divorce Counselor
Divorce at any age is emotionally difficult, but as you age and become more set in your ways, it’s especially difficult to face the changes you will endure post-divorce. If you feel anxious, depressed or alone you should see a psychologist who can help you handle the grief associated with divorce.
Once you have assembled a team, developed a budget, gained an understanding of your assets, planned your living arrangements, considered your health and mobility needs, made arrangements to stay in contact with your family and visited a psychologist to deal with the anxiety and grief associated with a divorce, you are not quite finished. After your divorce is over, you will need a post-divorce estate plan. The Texas Estate and Family Code will keep your former spouse from inheriting your assets, but you need a new plan to ensure your assets are inherited by your loved ones. You need a new a will, power of attorney, medical power of attorney, directive to physicians and HIPAA release. If you have substantial assets, you may want to consider a trust or family limited partnership to protect assets from creditors and reduce or eliminate estate taxes.