With the benefit of age comes the ability to have built up wealth that stands to benefit you, your spouse, your family and generations of your family to come. The effort that you put into building a business or saving for your retirement was not insignificant. What happens, though, if before you are able to take advantage of that effort you or your spouse file for divorce? Was all the hard work and discipline not worth it?
If you are over the age of fifty and are facing down a divorce you are likely in a position that you did not every anticipate being in. The fact is that very few people over the age of fifty got divorces until recently. Over the past generation or so what is commonly referred to as “gray divorces” have increased in number a great deal. As people live longer the chances of a getting a divorce increase for no other reason than persons have a longer amount of time to consider their options and eventually determine that a divorce is in their best interests.
The other factor that we need to consider is that as divorces in general have become more common in the past couple generations, if you are considering a divorce in your fifties or sixties you may not be on your first marriage. Second, third and fourth marriages have increasingly higher rates of failure than do first marriages. Moral of the story: if you don’t get it right with your first marriage, the odds of you getting it right later on do not improve, they actually worsen.
Finding yourself in a marriage that you believe needs to be terminated is a position none of us want to find ourselves in but if you are there please consider the information that follows this introduction. The attorneys with the Law Office of Bryan Fagan, PLLC would like to share with you some thoughts and advice on how to handle a gray divorce- especially if you and your spouse are wealthy.
What is the status of your estate plan?
Wealthy people often times have elaborate and well thought out estate plans in order to ensure their wishes are honored following their death- and also to avoid paying more in taxes than is absolutely necessary (more on that in a moment). Trusts, partnership agreements and other mechanisms of the estate planning world are put into effect in order to ensure that family members are cared for financial expenditures are kept to a minimum.
When people in your position decide to file for divorce, a wrench is thrown into the carefully constructed plans that had been created beforehand. If your interests are now at odds with that of your spouse, those estate plans, trusts and other provisions that had been in place are no longer going to work for either of you. You then have to consider who is actually going to end up with what property. Suffice it to say that your best laid plans have now gone awry.
If you have significant financial or familial issues to consider as a result of your gray divorce it is essential that you hire an attorney who has experience handling divorces like yours. It is not enough to hire an attorney who has filed one or two divorces. What you need is an attorney who has experience negotiating favorable settlements for clients but also present their cases in court for judges and juries.
What is to be done with the family business?
Many spouses who are in their fifties, sixties and beyond own businesses together. These family businesses may have been the source for your wealth but are now subject to being divided up in your divorce. Think about how child custody is an issue for younger spouses going through divorce. The circumstances of your divorce are similar in that you must now figure out how to divide up your business.
Will the business be maintained? If so- who is going to continue to operate the business on a day to day basis? Will the other spouse be able to access the financials of the business to check in on how the business is operating? If you are stepping aside, what percentage or share of the overall profits of the business are you going to take home in the divorce? These are all relevant questions to ponder.
Some spouses decide simply to sell the business and completely go their separate ways after the sale. This is all good and well, but there are multiple methods for valuing a business that can often result in varied results in terms of that value. Consider also your roles in building and running the business. If your spouse worked on the day to day operations much more than you (who was a stay at home parent for the most part) how will you determine what is a fair breakdown and split of the profits from the sale of the business?
Everybody’s favorite topic- taxes!
We mentioned taxes briefly on our section regarding estate planning and now we will have a chance to do a deeper dive into this exciting topic. When large amounts of money and assets are involved in a divorce, taxes are a relevant topic to discuss. Consider your recent tax history to determine the likelihood of an audit or other problem regarding recently filed taxes. Then you and your spouse will need to consider how best to structure your divorce settlement from a tax perspective.
If you use a financial consultant or investment consultant in your day to day life, consider your options when hiring a family law attorney. Most family law attorneys do not give tax advice, nor are they equipped to do so. You may need to bring aboard an accountant or someone like that to advise you on tax specific issues in your divorce.
Everybody’s second favorite topic- insurance!
Do you own a life insurance policy? Does your spouse? Who is paying the premiums? Who will pay the premiums on any policies that insures both your life and that of your spouse? Many people have these type of policies in order to fund trusts when both spouses pass away. If you and your spouse have insurance policies like this in place and you want to maintain them after the divorce you will need to decide who will be paying for them.
Secondly, if you decide to cancel a policy you may find it difficult to be approved for more coverage based on your age and/or your health. If you most likely fall into this category it may be in your best interest to attempt to keep the coverage that you already have.
Finally- are you covered under Medicare, a spouse’s health insurance policy or through a privately purchased plan? The same issue may apply here as it did in regard to life insurance. Are you insurable? It may be worthwhile for you to attempt to negotiate a settlement with your spouse that includes a chunk of money that can be utilized to purchase health insurance if it is not available by any other means.
Most importantly- think about these issues ahead of time. You do not want to have lapses in coverage for either life insurance or health insurance if you can avoid it. You also do not want to be put into a position where you are having to pay an arm and a leg for insurance through a program like COBRA. Learn your options, know your rights and then pursue them aggressively in your divorce.
More tips, tricks and tidbits of knowledge to be posted tomorrow regarding gray divorces
Thank you for your time in stopping by our blog today to read our thoughts on the important topic of gray divorces. For more on this subject please come back tomorrow to read our second blog post on this topic.
Do you have questions for one of our attorneys? Please contact the Law Office of Bryan Fagan, PLLC to speak with one of our attorneys at no cost. Our consultations done at our office are pressure free environments where you can ask questions and get answers on any topic in the field of family law.