Improved quality of life and life expectancy has increased the number of couples divorcing in later life, particularly over age 65, often referred to as “silver separators”.
Although the below issues are not limited to those considering a divorce in later life, they occur more commonly in such cases. The information set out in this insight is just as relevant to younger couples contemplating divorce.
Whilst financial considerations are important to every couple thinking about ending their marriage, this is all the more true for those who have already retired. For many retired couples, the most valuable asset(s) may well be their pension(s).
A pension is not only the income it produces during retirement. There may be benefits payable upon death, e.g., widow/widower’s pensions which can alone be very valuable. A divorce will end any entitlement of a former spouse to such benefits. However, upon divorce, the parties can share pensions, resulting in each party receiving their own separate income stream. A pension-sharing order has the effect of reducing the amount received by the original pension member's spouse.
Although not exclusive to parties with pensions in payment, it is sensible for input to be obtained from a pension divorce expert who can both ascertain the true value of pensions and recommend how those pensions ought to be shared to achieve fairness for the parties.
When looking at dividing matrimonial wealth, older couples may have other requirements such as ensuring they have enough capital to meet their care needs later in life. Such couples might also want to consider whether divorcing is the right option for them. As mentioned above, widow's benefits are lost upon divorce but where pensions are producing an income that ought to be shared, a pension sharing order can be made on divorce giving each party control over their finances.
There are also inheritance and tax implications that should be considered. If a couple are separated but remain married, they retain the legal relationship of husband and wife and therefore if one or both parties do not have wills, the other will inherit all or part of their estate (depending upon the existence of children) in the event of death. For more information on intestacy click here.
On divorce, this ceases to be the case and any wills benefitting a former spouse cease to do so. The importance of preparing a will, particularly if contemplating a separation or divorce, cannot be overstated. For more information on making a will click here.
Assets passing to a spouse on death typically pass without inheritance tax becoming payable. Capital Gains Tax can also be avoided where assets are transferred between spouses during their lifetimes. The same is not true once a couple has divorced as the parties are no longer legally married and are not classed as a spouse. Financial and tax advice should always be sought before important decisions, that may have financial consequences, are taken.
There are also complex issues where one party may have a medical condition impacting their ability to make decisions. We have a separate insight dealing with capacity issues on divorce.
What are my next steps?
Whatever you are considering, it is important to seek legal advice so that you decide upon a way forward in an informed way. A Family Law solicitor will be able to guide you through your options and advise you about your next steps. Our team of specialist family lawyers offer a free initial consultation.
