Planning financially for a Georgia gray divorce is crucial​

On behalf of Ravelle Smith

Financing life and retirement after a gray divorce requires careful planning and an understanding of property division laws observed during divorce.

Divorce can present a financial hardship for virtually any couple in Alpharetta, Georgia. However, couples going through a divorce after the age of 50, which is frequently referred to as a gray divorce, may face especially harsh financial impacts.

These divorces are becoming more common; according to the New York Times, a 2013 study found that the divorce rate among people older than 50 doubled between 1990 and 2011. In 2011, one-quarter of people who had divorced within the past year were in this age group. It’s essential for Georgia couples entering these gray divorces to understand the financial challenges they will likely face.

Difficulties with gray divorce

Divorcing at a young age leaves room for economic recovery. People who divorce closer to retirement have little time to overcome their losses. This issue is exacerbated because funding two separate retirements costs more than funding a shared retirement, according to Dallas Morning News. Some expenses, such as increased insurance rates, affect both spouses. Others, such as pursuing independent health insurance, only affect one spouse.

Couples who were on track to retire together may find that their savings are inadequate. These couples will typically need to make at least one of the following adjustments to their lifestyles and retirement plans:

• Delay retirement.
• Return to work.
• Plan for a downgraded lifestyle.

Most people can benefit from working with a financial planner to budget effectively. A financial planner can also help a spouse determine the best use of marital assets instead of making irrational decisions. For example, some spouses fight over the family home because of their emotional attachment to it, even though paying property taxes, the mortgage and upkeep costs may not be financially feasible for either spouse.

A fair division of assets is also essential during a gray divorce, since retirement can be difficult even when assets are divided properly. Unfortunately, reaching an appropriate division can be difficult because couples in longer marriages have often accumulated substantial or complex assets. This makes it important that Georgia spouses understand what to expect under their state’s property division laws.

Georgia property division

Marital property is divided equitably under Georgia law. With the exception of third-party gifts and inheritances, any property that one spouse acquires during the marriage is marital property. Even assets such as pensions, 401(k)s and other retirement savings must be divided equitably between both spouses.

An equitable distribution is not necessarily an equal distribution; instead, a family law judge decides what constitutes a fair distribution based on several factors. These could include the length of marriage, the age and health of each spouse, the financial need of each spouse and the marital standard of living. The judge may also factor in the way each spouse contributed to the marriage, whether as a wage earner, homemaker or parent.

Spouses who have considered the costs of gray divorce beforehand will be better prepared to demonstrate their economic needs, which improves the likelihood of an appropriate settlement. Still, most spouses can benefit from working with an attorney during divorce proceedings to ensure that the final settlement is fair and will support the spouse through the financial challenges ahead.