Going through a divorce late in life
The divorce rate among older people is on the rise. Many older adults are getting a divorce at a time when they could be expected to be settling into retirement together. Making the decision to get a divorce later in life and the practicalities surrounding that decision can be a daunting prospect.
Divorce is very common and people of all ages divorce for many of the same reasons. Some of the most common reasons given for marital breakdown are infidelity, constant arguments, verbal and physical abuse, alcohol, drug and other addictions and simply falling out of love with a partner.
Statistics Canada notes that the rate of divorce for those 55 and over is steadily growing, and is expected to increase. For couples who are separating later in life, there are some particular barriers that they need to cross, that younger people do not have to consider, such as pension and retirement fund splitting and selling off a home they have probably lived in for most of their lives.
The cost of living for a single person is much more than that of a couple, no matter what age you are. However, for seniors, divorce at this later stage can lead to a huge change in financial circumstances and there is no opportunity to go back to work and bring in a salary to make up the difference.
Canada has a no-fault divorce system. There are three reasons you can use to apply for a divorce. You and your spouse have separated and have lived apart for at least one year, or your spouse has been physically or mentally cruel making living together intolerable and finally, your spouse has committed adultery.
No matter the reason for the divorce, matrimonial property and debt are divided equally between both partners unless otherwise agreed upon. The Matrimonial Property Act (MPA) states that matrimonial property is that which was acquired by either spouse or jointly during the marriage. This includes bank accounts, pensions, cash, stocks, cars, jewellery and property.
There are some items that are excluded from the act and these include assets owned prior to the marriage, inherited assets, proceeds from a personal injury lawsuit or insurance and gifts from a third party.
If you are in an unsafe relationship, all other factors need to be ignored, personal safety comes first. But, if abuse is not the reason for ending a marriage, taking the time to really understand where you sit financially and with your home, usually a couple’s most valuable asset, is of huge benefit.
One of the most important issues for older adults is finances. There is often one partner in a marriage who knows more, often much more, about the couple’s financial situation than the other. When deciding to separate, it is important to understand the financial fallout that will follow. You both need to know how much money you have and what assets you own along with what you owe.
Take time to create a list of all the assets you own together and those you own separately. Make a copy of the supporting documents for these assets. Keep a copy of your bank statements. The same reasoning applies to any debts that you have. You should be able to provide a lawyer with credit card statements, mortgage statements, car loan papers etc.
Also, make sure you have a copy of your tax returns and any pension statements that you receive. It is much easier to figure out how to separate finances if all the information about the finances is organized in one place.
Recognize that it is most likely that you will have to sell the family home to release the equity so that it can be divided between the two owners. If one person decides to keep the family home they need to make sure they have the funds to look after the property. A new roof, boiler or other emergency could blow an already tight single person’s budget.
Most couples have a joint life insurance policy. If you have a joint life insurance policy, you should both try to keep it, as it is much more expensive to start a new life insurance policy after 65. Make sure that you each change the beneficiaries though, as it is unlikely you would want your ex-partner to financially benefit from your death.
When you collate all that financial information don’t forget to calculate in your lawyer’s fees. Using a lawyer, an uncontested divorce can cost around $1800, while a divorce contested in court can cost upwards of $13,000 dollars. While only time can heal the emotional pain of the end of a marriage, coming to an agreement on how assets should be split is the smartest financial decision you can both make and will at least ease the financial pain.