SEPARATING LATER IN LIFE IS FINANCIALLY FRAUGHT.
DIVORCE LATER IN LIFE COMES WITH ITS PERILS
Divorce at any age can be emotionally and financially taxing, but for those above the age of 50 and especially for retirees, the stakes can be even higher.
Such so-called “grey divorces” have been on the rise for decades in Canada, and as the baby boomer generation ages, they are only becoming more common.
While Statistics Canada doesn’t record current data on age-based divorce rates, the median age for divorce rose between 1991 to 2008: for men it jumped from 38.3 to 44 years, women jumped from 35.7 to 41 years.
Toronto-based Shulman Law Firm spoke to Financial Post recently about their own internal data, which they say bears out the change.
A decade ago, about 10 per cent of their clients were 50 and older. But the firm now says the demographic “constitutes approximately 40 per cent” of their clientele. Interestingly, the age group of 60 and older saw the most significant change, nearly doubling over the past 10 years — although it still remains the minority of cases at the firm.
Getting divorced later in life poses problems that other age groups frequently do not experience. Older couples who split up have often been married for longer periods, which means there can be more assets and liabilities, complicating the process.
Limitations on future earning potential, especially for those in their 60s and 70s are also a challenge.
“The concern I always have when I’m dealing with a woman or a man in their late 60s (is) they don’t get another chance. They don’t get another career in which to make money,” said Mary Jane Binks, of Ottawa-based Augustine Bater Binks LLP.
With so much at stake, here are some things to keep in mind:
EVERYTHING IS ON THE TABLE
While most people know that major assets such as the marital home will be divided, other assets that build up over the course of a marriage are also in play.
“Often the biggest asset in the family is someone’s pension. It’s not the house, It’s the pension,” said Greg Evans of Winnipeg-based Evans Family Law. “Baby boomers tend to have really good pensions.”
The realization that it can be divided can be a tough pill to swallow, according to Diane Isaac, a family lawyer at Shulman Law.
“With married couples because they thought, ‘This is something I’ve worked for, why are they getting half of this?’ and we obviously have to explain that as a result of the marital dissolution by divorce, all this is subject to division,” Isaac said.
Similar to a pension, both parties also need to share their liabilities. If one person had debt that wasn’t disclosed in the marriage — for example if they had a gambling problem — or spent money that was meant to be saved, all of a sudden it becomes a problem for both.
Secondary properties, such as a family cottage, can also be up for division as well. Even an heirloom cottage that was handed down through the generations on one side of the family is often treated as a shared recreation property when the time comes to divide assets.
EMOTIONAL TOLL
While all divorces are entangled in emotions, grey divorcees tend to come following marriages that have lasted for long periods of time.
“We use counsellors to help people deal with their emotional stuff,” said Evans, who says the majority of cases he deals with are grey divorces.
In Canada, it does not matter whether one partner’s conduct was more to blame for the breakdown of the marriage when it comes to splitting assets.
“Because we have no-fault divorce in Canada, whether or not my spouse cheated on me doesn’t change the way property is divided,” he explained.
Evans said that bringing a couple’s children into the process only adds to the potential emotional toll, even if the children are in their 30s or 40s. “I think people forget that they’re still their children,” he said.
IT DOESN’T HURT TO BE PREPARED
Obviously no one plans to get a divorce when they’re getting married. But getting a marriage contract can prepare individuals just in case they end up in a messy separation situation. If someone inherits money from their parents as a gift, but would like to keep that money from entering the marriage, they can include that in a marriage contract as not belonging to their spouse.
“Well I’ve seen some people unfortunately in their 60s and 70s left with very little after a bad relationship, I’ve seen people cleaned out. And it’s a shame, if they don’t have a contract that protects their interests it can be very dicey,” said Binks.
Entering a second marriage, a contract can be essential. If there are children from a first marriage, it might be important to make sure that the money kept aside for the children (for school, or a home) is kept safely on the side for them, rather than being shared.
REDUCE THE COSTS
Once a couple reaches a state where their marriage cannot be saved, there are still things that can be done to minimize the pain and costs of a divorce.
While collecting decades worth of financial documents accrued throughout a marriage can be tough, being organized and open with everyone involved can save money. When couples can give the lawyers all the information they need up front, and make decisions on their own without fighting in court, it’s even better for their wallets.
“There are some people who have no idea what they have, or they let the other spouse control this,” Isaac said. “There are some people who don’t even know what their spouse earns. But I think the more you organize your own information, A) it’s more cost-effective and B) It helps to strategize how we’re going to move forward.”
Focusing efforts to stay out of court is also helpful. A lawyer can cost anywhere from several hundred to hundreds of thousands of dollars. When couples are retired and have no new income, that can represent a major difference in their future quality of life.