A Guide to Navigating Empty-Nest Divorce
Your kids are grown, you are approaching retirement (or are already there), and your sights are set on the rest of your life. The twist? Your vision does not include your spouse.
“Empty-nest divorce,” sometimes called “gray divorce,” refers to couples divorcing who no longer have minor children at home. While child support is no longer on the table, seven key issues have factors unique to empty-nest divorces.
- Alimony: Alimony is financial support paid by one party to the other. In empty-nest divorces, one or both parties may be retired already or nearing retirement, so the money available for support may not be from traditional earned income, but from other sources, such as retirement and investments. Determining alimony in these cases requires examining the cash flow options currently as well as at the time of retirement, and each party’s age, health, ability to earn and work longevity. Actuarial tables for life expectancies may also be helpful when alimony is at issue.
- Retirement: Traditionally, retirement savings are assets that may be divided between the parties upon divorce. Because empty-nesters may already be retired, however, and therefore in pay status for their retirement savings, retirement becomes a source of income. Looking at retirement from a cash-flow perspective is important because depending on the parties’ ages, one may be able to access their retirement without penalties earlier than the other. Another consideration is each parties’ ability to continue growing retirement prior to withdrawing it and relying upon it as income.
- Government Benefits: Government benefits, such as social security, are another source of support to consider. Depending on the parties’ ages, one party may be eligible for government benefits earlier than the other, which can impact cash flow, as with social security, and expenses such as healthcare coverage through Medicare.
- Timing: Depending on the parties’ ages, it may be better for the couple to stay married and execute a postnuptial agreement with comprehensive estate planning, rather than get divorced. For example, if one party is reliant on the other party’s health insurance coverage. In other cases, it may be best to get divorced. For example, if one party is transferring or gifting away assets, or if one party needs to enter into a care facility which can be paid for by means-tested public benefits.
- Insurance: Life, health and disability insurances are important. (1) Disability insurance can also provide cash flow security. (2) Parties can only maintain a spouse on their health insurance policy until they are divorced, and private health insurance is typically extremely costly. Until a party becomes eligible for Medicare, the cost of health insurance must be factored into each party’s budget. (3) Life insurance may be an asset if there is a cash value. Parties may also agree to maintain insurance for the benefit of the other to ensure financial security.
- Competency: It is important that each party has capacity and is competent to make decisions in any divorce process. If either party does not have capacity, it is crucial that an appropriate person be appointed to make decisions for them. Capacity also affects each party’s needs and expenses, which should be factored into determining support and division of assets upon divorce.
- Adult Children: Adult children often play a role in empty-nest divorces and the dynamics of the case. They frequently have opinions about what should be done, at times they choose sides, and at other times they may step in to support a parent who lacks capacity. Adult children also often play a role in supporting their divorced parents who are later remarrying in obtaining prenuptial agreements before the remarriage.
As the population ages, we are seeing an increase in the number of empty-nest couples pursuing separation and divorce. The fact-specific nature of every divorce case makes it important to have a good understanding of your options as soon as possible, even if you are only contemplating a divorce. Further, having guidance from an attorney who understands the key issues of an empty-nest divorce will be important as you consider both short- and long-term decisions and formulate a plan for your life after divorce.
Erin Kopelman is a divorce attorney who handles cases involving domestic relations and family law, including all issues involved in an empty-nest divorce. For more information, contact Erin at [email protected].