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‘Gray divorces’ and ‘silver separations’ present special challenges
Once again, baby boomers have come up with something new and all about us. It’s called the “gray divorce.”
Used to reference the series of noteworthy legal events occurring when couples end marriages after age 50, gray divorce denotes not only changes in marital status occurring later in life, but also the myriad issues faced by the AARP generation that are not always faced by younger couples.
In other words, so-called gray divorce involves much more than telling one’s spouse “I shoulda left you way back when I was 40.”
Truth be told, divorce seldom ought to be the subject of kidding, regardless of the ages of divorcing couples. Every divorce involves the breakup and resolution of the physical and economic partnership formed when a couple marries. Thus each divorce involves an inventory of property, assets and other things acquired and/or owned by a couple both prior to and during marriage, so that the court can decide the often complicated question of who leaves with what when a marriage is legally dissolved.
In bygone times couples who managed to stay together for 30 years would often remain married forever. Issues that now regularly occur when couples divorce after age 50 were few and far between.
But times change. People live longer. Sometimes more familiarity breeds more contempt.
Today, one in four people currently experiencing divorce is over 50 — double the rate of just 20 years ago. And while divorcing 55-year-olds may not have to battle over child custody in the way that 30-year-old couples might battle, there are many issues to be resolved that were analyzed far less frequently back when “silver separations” were less common.
Dividing up property
When considering divorce later in life, many people first ask, “Will I end up with enough to live comfortably?” While courts start at a roughly equal division, several factors influence the final division.
Prenup? The existence of a prenuptial agreement can alter how an estate gets divided. Many who had assets — or expected to inherit assets — utilized a prenup to spell out how property would be split. Even with a prenup, particularly one drafted years ago, the analysis continues. Courts may try to “invade” the otherwise separate property of one spouse to get to a division the judge prefers. The old saying that “the devil is in the details” squarely applies here.
Separate versus marital property: A judge’s first job in carving up property is to determine what is “marital” and what is “separate.” Separate property could include assets a party brought into the marriage or that a party received through gift or inheritance during the marriage. Conversely, property that comes to the marriage either by reason of the marriage or because it is earned during the marriage belongs to the marriage. Of course, in the murky waters of the law, it is simply not that clear.
Property that one party says is “definitely mine” can, through the often unintended actions of the parties themselves, change to marital. Titling an inherited asset jointly, such as for estate planning; depositing funds into a joint account; or paying income taxes or insurance premiums from joint funds can all cause the once-separate asset to be “comingled” with, and turned into, marital property. Similarly, parties can contribute to appreciation of the separate asset, even via labor, which could affect the category into which the court places the property.
But let’s not stop there. Michigan courts have authority by statute to award one party’s separate property to the other. One statute deals with a party’s contribution to the asset, and another allows invasion if the court simply feels the marital settlement to a party is “insufficient for suitable support.”
What can be divided? The universe of property to divide includes the usual suspects such as real estate, business interests, financial and retirement accounts and “stuff,” like household goods. Other less obvious things include deferred-comp plans, banked vacation time, frequent flyer miles, lifetime health benefits, workers comp benefits, escrow funds, prepaid end-of-life arrangements, season tickets (ouch, U of M fans), patents, voting rights, professional degrees, life estates, rights of first refusal, referral fees and litigation rights.
In short, people will argue about — and the court can consider — anything that has an ascertainable value. The court allocates debts, as well.
What’s it worth? Many older folks have significant retirement benefits, vehicles and homes, antiques or artworks, and closely held business interests. All must be valued in a divorce, and the burden of establishing value rests with the party who wants it divided.
Hiring a qualified valuation expert is an absolute must. Since these people don’t come cheap, this can significantly add to the case expense.
The assumptions utilized in making value calculations can also cause a significant difference in value. For example, is the business worth the $850,000 that one expert suggests, or $8,500,000 as indicated by the other? Predictably, bigger numbers mean bigger arguments.
Another major issue often present in later life breakups is spousal support, formerly known as alimony. Courts will look at several factors.
Need versus ability to pay: If one spouse was typically stay-at-home, and the other generated significant income, support is likely. If the breadwinner is now retired but pulls in more money than the other — such as through Social Security benefits, retirement and interest — support is probable.
Property each receives: In the larger estates of the older set, it is more likely that each party receives sizeable property awards that may generate sizeable incomes. The court will see what income a party may receive to determine whether to award support.
Health. A party’s special health costs can also influence the court. The costs of prescriptions, treatments and caregivers may be issues in later-life divorce cases.
Divorce for the baby boomer generation, while excluding all the kid issues of younger couples, presents certain special legal challenges. These can be more significant than “who gets the house?”
A lawyer with proper information, knowledge of the law and an understanding of the attitudes of opposing counsel and the judge can advance a client’s cause for a fair and equitable result.
A divorcing person can help his or her own cause considerably by providing the lawyer with a complete, accurate and current list of assets, liabilities and income, supplemented by reliable documents. The lawyer is no better than the facts to be dealt with, and the sooner the lawyer has sufficient information, the better the chances for a favorable result.
Bob Rutgers is a trial lawyer at Varnum LLP focused on commercial, corporate, and family law matters. Bill Rohn is chairman of Varnum’s Trial Practice Group in Grand Rapids.