Attwood Marshall Lawyers Family Law Senior Associate Hayley Condon joins Robyn Hyland on Radio 4CRB to discuss the impact COVID-19 has had on many relationships and how divorce rates for couples in their later years appears to be increasingly more common.
We are living longer, working later in life, and planning for retirement so that we can enjoy our twilight years. For many couples, retirement is a time to reflect on everything you have achieved and the family you have raised whilst enjoying the fruits of your labour. This is meant to be the time to focus on yourself and spend more time with your significant other. Unfortunately, it can be during this time that some couples come to realise that they are no longer happy or fulfilled in their relationship and make the difficult decision to split and go their own way. Without the distractions of children, an empty nest can often accentuate any unresolved issues that have been swept under the rug.
Divorcing later in life
A term which has become more widely used to describe separation of couples aged 50 and over is “grey divorce”. As an aging population, many couples are sharing their concerns about what retirement may do to their marriage.
For some couples, they simply grow apart from their spouse, or envisage a different future for themselves and how they want to spend their retirement and twilight years.
Three common reasons why divorce for older couples is on the rise:
- Couples feeling disconnected or growing apart: This is one of the primary reasons that contributes to divorce later in life. After years of being busy with daily life including raising children, meeting work demands, and maintaining friendships and other social activities, couples can easily find themselves moving in different directions. When you are facing an empty nest and there aren’t quite so many distractions, this is when couples come to realise they may not have as much in common as they once did earlier in the relationship.
- Couples being unable to resolve conflict effectively: If conflict goes unresolved, resentment can build up over time. If couples are unable to communicate effectively or give the time and energy required to resolve conflict as it arises, this can leave anger simmering beneath the surface to a point of no return.
- People reflecting on the “time they have left” and not wanting to spend their remaining years in an unhappy or unfulfilling relationship. It has been said that some people in their later years have a sense that the clock is ticking, and they do not want to try to fix something they are no longer happy with, and instead choose to walk away and start “fresh”.
According to a study undertaken by Pew Research Centre, data shows that the divorce rate for this particular age group doubled between 1990 and 2015. It may be that more and more couples are open to talking about their dissatisfaction in their marriage, and divorce has become less taboo over time.
The COVID-19 pandemic and divorce trends
The pandemic certainly has given people the opportunity to reflect on their circumstances and whether they want to remain in their current relationship.
Some families have been faced with financial strain and forced into isolation in the one home for lengthy periods without any outlet over the last 18 months. For couples that were already experiencing issues in their relationship, this may have put additional strain and stress on it to the point of breaking.
Now that restrictions are beginning to ease throughout Australia, we can likely expect to see an increase in separation rates with people able to move around more freely and get back to some kind of normal. However, we may not see the true impact of COVID-19 on the divorce rate until we see more economic recovery and freedoms being granted into the new year.
Some people may be hesitant to react too quickly and may want to stabilize their finances before making big decisions about moving out of the family home and going their separate way.
Many people want to prepare for and feel comfortable with the property settlement process before taking that next step. They may start doing their homework and get their ducks in a row in preparation for separation. Some people may be concerned that if they begin this process now, only to get thrown into another lockdown, they run the risk of being caught in the one home with their estranged spouse.
Important things for people 50+ to know if they are considering separation and divorce
People separating later in life face different obstacles compared to those who separate earlier in their life where there may be young dependent children involved, for example.
When relationships break down later in life, the focus tends to be on how separation may impact retirement plans, superannuation balances, and the ability of both parties to support themselves into the future.
This can lead to disputes over who will retain the family home and what is a just and equitable division of shared and individual assets that have been accumulated during the relationship.
How divorce later in life can affect someone’s retirement plans
When a couple decides to split and go their own way later in life, this significant decision will impact retirement plans.
Firstly, the couple is faced with the prospect of having to divide up the assets that they have accumulated during their relationship.
There are many things to consider such as if the family home will be sold and both parties move on to start fresh elsewhere, or if one party will retain the home. There is also the issue of superannuation and if a spouse’s member balance will be split with the estranged spouse.
Secondly, the parties moving forward individually with less money than what they had as a couple will impact their retirement plans and what they may, or may not, be able to afford for their future.
If parties are retired, this raises another complexity as their only source of income for support will normally be their assets such as dividends from a share portfolio, superannuation pension or rent from an investment property.
Determining how to divide assets at this stage of life can be challenging and often more complex compared to a couple in their 20s or 30s that have separated as there tends to be more wealth to divide.
This is just one of the reasons why it is important to obtain legal advice from an experienced family lawyer about your rights and entitlements if you decide to separate from your spouse, before moving forward with a property settlement.
Is there a set formula as to how property should be divided?
It is a common misconception that when couples separate, the asset pool is split 50/50. This is not the case. In general, there is no set formula used to determine how property should be divided.
Every case comes down to its own facts. What will be taken into account is:
- The contributions made by each party both during the relationship and after separation including financial contributions, non-financial contributions and contributions made to the welfare of the family; and
- Future needs considerations such as the age, health and earning capacity of both parties.
All of these matters are taken into consideration in determining what is a just and equitable division of the asset pool for the parties in question and based on their relationship circumstances. This may result in an equal division of property, or it may not.
Other things that should be considered when separating from your spouse later in life
It is always recommended that immediately following separation that you:
- Review your Will and any Enduring Power of Attorney, or Appointment of Enduring Guardian documents that you have in place. It is not uncommon for a party to name their estranged spouse as Executor and Beneficiary in their Will. In addition to a Will, a person may have an EPOA/AOEG appointing their estranged spouse as their attorney and guardian, which gives them the power to make all important financial, health care, and personal decisions in your life the event that you lose mental capacity to make those types of decision for yourself.
After a couple separate, in most cases it can be expected that the parties do not want their estranged spouse having this level of power to make decisions for them, or for them to benefit under their Will.
Separation is a time to get these documents out to review and update them accordingly to ensure that they reflect your current wishes. If you do not have a Will or EPOA/AOEG in place, this can also be a good time to draft these documents whilst you are already engaging with your lawyer, and ensure you have all the legal documents you need so that you plan for the future and preserve your wishes in line with your current circumstances.
- Another matter that can be easily forgotten is if you have any binding death benefit nominations for superannuation accounts or any nominated beneficiary for a life insurance policy in place. Do not forget to review and change these if necessary. These are generally forgotten in the aftermath of a relationship breakdown as people are focusing on the immediate issues of dividing property, moving to a new house, and moving on with their life.
Given that life events can occur which are beyond our control it is always best to resolve property matters with a spouse promptly after separation and to dissolve your marriage when you are able to do so – noting you must be separated for at least 12 months before being able to apply for divorce.
If this is left too late, it could lead to unexpected outcomes. For example, if you pass away and at the time of your passing you are separated but not divorced, have not formally resolved property matters with your estranged spouse and you still own a home with them as a joint tenant, then that spouse will automatically take ownership of the property.
Not resolving property matters promptly also limits your freedom to make choices about what new property you wish to buy or investments you wish to make as it is not recommended that you change your financial position until matters are resolved with your estranged spouse. If you do change your financial position before resolving property matters, you risk those new assets being included in the asset pool.
Is a property settlement costly?
Finalising property matters does not need to turn into a costly exercise or an extended legal battle. Separation and property settlements can be as simple or as complex as you choose to make it.
Parties can settle matters through negotiation or mediation without having to set foot in the door of a Court room avoiding the stress, delay, or expense of litigation.
What is imperative is that once a property settlement agreement has been reached, that it is formalised in a way that is legally binding under the Family Law Act, whether that be through a binding financial agreement or application for consent orders. This will give you protection from your spouse coming back at a later date to try to reclaim a larger share of the asset pool.
There are also taxation benefits when you formalise your property settlement. These can include not having to pay stamp duty or registration costs in terms of transferring assets between spouses.
Separation can be a very difficult time for families. This is a time that both parties can make decisions in haste and based on emotion. It is always best for all parties involved to obtain independent legal advice from an experienced family lawyer before embarking on the property settlement process because it can be just as difficult for people 50 and over, as it can be for people in their 20s and 30s.
Attwood Marshall Lawyers – Helping you through separation
Attwood Marshall Lawyers have a dedicated family law team who practice exclusively in family law matters. The team are well-versed at assisting clients with divorce, property settlements, binding financial agreements, parenting disputes, and estate planning.
We can help you understand your rights and obligations and will guide you through this challenging time and change in your family circumstances. We want to help you move on as quickly as possible and reduce conflict.
Applying for a divorce; you’ve separated for 12 months, the dust has settled, and you’re ready to make it final. What next?