Attwood Marshall Lawyers Family Law Senior Associate, Carlu Booth, joins Robyn Hyland on Radio 4CRB to discuss what older couples need to consider when they separate later in life.
Divorcing later in life
When a couple separates later in life, there are different issues that come to the surface compared to those who separate in their 20s, 30s or 40s.
In most cases, children have left the nest and are no longer at home or dependent, and planning for retirement is well underway. But all those plans can come undone if a relationship suddenly ends and you must divide up assets that you have accumulated throughout your lifetime.
One of the biggest concerns for couples who separate later in life is how they will be able to sustain their lifestyle and be financially secure as they accept their new single status.
Many people in their 60s and up have limited to no earning capacity, so divorce can have a big impact on the decisions they make about retirement living and potentially transitioning to aged care.
The financial impact for older couples calling it quits
A report completed by AIFS on the Household, Income and Labour Dynamics in Australia shed some light on the impact of divorce for those aged 55 to 74 years old.
The report found that on average divorce had negative consequences for income in older age groups for both men and women. However, the negative financial impacts of divorce were substantially reduced by remarriage.
Older divorced single Australians were much more likely to experience material hardships and to report having a lower level of prosperity than the “married” and “never divorced” groups.
There is no doubt that divorce later in life has financial consequences, however the division of property during separation will always come down to what is considered “fair and equitable”. There is no single rule that applies to all, and each matter is determined on its own facts and merits as to who will get what.
The key considerations that will be looked at to determine who gets what generally follows a 5-step process, which includes:
- Determining if there should be a property settlement (there is no automatic right to a property settlement following a relationship break down).
- Working out what property there is and what value it holds.
- Reviewing the contributions made by both parties during the relationship, including financial, non-financial, and contributions as a homemaker or parent.
- Looking at the future needs of each person. This can include factoring in the age and health of both people, their income, property and financial resources, and their physical and mental capacity for employment. Although health can be a significant factor no matter your age, this certainly can be more complex when a couple divorces later in life, with potentially one party having great health needs than the other to consider.
- Determine if the property settlement is fair and just. This is where the Court will look at the proposed property settlement and determine if it is a fair division.
Superannuation and property settlements
Superannuation is an important component of retirement planning, and unsurprisingly, is one asset many people would prefer to leave out of a property settlement when divorcing later in life. However, superannuation is treated just like other assets and is put in the overall asset pool to be divided.
Historically, it was relatively common for parties to a divorce to try to hide assets such as superannuation during the proceedings. This is much harder to do today with new laws being implemented to ensure full disclosure of these assets.
Under the new laws, a party to a family law property settlement can apply to the Family Court registry to request their former partner’s superannuation information, held by the ATO.
When navigating a property settlement, it is important for both parties to provide a full and frank disclosure of their financial circumstances.
Despite custody and child support no longer being an issue for those divorcing in their 60s or beyond, changes in family circumstances can still impact adult children when their parents separate.
Generally, the first phase people go through when a marriage breaks down is the grieving stage. This isn’t just for the couple involved, but also the family unit as the whole family dynamic shifts.
It is often the case that adult children get involved, which can add to the conflict. Whether a child takes one parent’s side, or they are the vessel to communicate between their parents, divorce and separation can impact relationships between parent and child, and siblings. When family members have different opinions on the matter and what is unfolding when a marriage dissolves, it can get very messy. Another common factor observed when adult children are involved in their parent’s divorce proceedings is when they become concerned about how the divorce may impact their inheritance.
Divorce proceedings will generally impact the former couple’s estate plan and may diminish the value of assets they once jointly owned.
One of the most difficult things to remember is that a property settlement should be treated like a business arrangement. Unfortunately, when emotions are running high, the process can become drawn out and costly.
It is a family lawyers’ duty to help their clients negotiate effectively and reach an agreement at the earliest opportunity so that the client can move on with their life.
Advice if you are facing divorce later in life
Divorce at any stage of life is a significant event that for many people is one of the most stressful and heart-breaking processes they will go through.
It is often said that divorce has significant financial costs, although these costs many people can bear. It is the emotional costs of divorce which can last a lifetime.
An experienced family lawyer aims to support their clients through the challenging times, explain the process so that they know exactly what to expect, and help reduce conflict as much as possible.
When navigating your way through a family law matter, it can help to adopt the concept of putting your family law matter in a metaphorical box which you only give yourself access to for one hour each day. This concept is to ensure that you do not let your family law matter consume your life.
By allowing yourself just one hour a day to “open the box” and think about what needs to be considered and actions that need to be taken, then giving yourself permission to put that aside for the rest of the day, will help maintain a healthy boundary when navigating this process.
This is no doubt easier said than done, but it is important to not let your family law matter completely run your life. Trust your lawyer to manage all the finer details so that the matter can proceed smoothly and be resolved as quickly as possible. An experienced family lawyer knows the best way forward and often will be able to guide their client who can understandably be overrun with emotions.
Don’t forget to update your Will and Enduring Power of Attorney!
It is often overlooked after separation, but most couples have reciprocal Wills leaving everything to each other and appointing each other as executor. They also usually appoint each other as the sole attorney in an Enduring Power of Attorney for both financial and medical decisions.
It is very important that you change your Will and Enduring Power of Attorney (EPOA) immediately, including a review of any entities you have (e.g. companies, trusts, self-managed super funds) to ensure that your former spouse or partner cannot transfer assets without your permission.
If you lose mental capacity through injury or illness, your former spouse or partner could step in to handle your financial and medical affairs under an EPOA. Even worse, if you die, your assets will be left to your former spouse or partner either through your Will or under the laws of intestacy if you don’t have a Will! Another twist is that if you own your home or other property as joint tenants, if you pass away, your half share in the property transfers automatically to your surviving joint tenant!
Attwood Marshall Lawyers – helping families resolve disputes with as little conflict as possible
When a relationship breaks down and couples go their separate ways, it is important to get considered legal advice to ensure matters concerning property can be resolved as quickly and efficiently as possible.
Our dedicated family law team specialise in all aspects of family law, including guiding clients through the process of separation and divorce, property settlements, binding financial agreements, parenting disputes, estate planning, and matters concerning domestic and family violence.
We can help you realise your rights and obligations when you separate from your former partner and guide you through this challenging time.
To discuss your family law services or to make an appointment with one of our family lawyers, contact our Family Law Department Manager, Donna Tolley, on direct line 07 5506 8241, email email@example.com or free call 1800 621 071.