By, Shirley Farmer, Attorney at Law
The information provided in this article is intended to give a general overview of the topic and is not intended as legal advice. For information specific to your situation, please talk with your estate planning professional.
Article #7, Divorce After 50
Previous articles have focused on topics of estate planning, but this month we take a look at a life event impacting more and more seniors … divorce. As people are living longer and society changes, we are seeing an ongoing rise in the rate of divorce among people over the age of 50. Statistics indicate that nearly a quarter of divorces now are occurring between people married for more than 20 years, and the rates of divorce for baby boomers have increased an estimated 50% in recent years. In the Oregon legal system, a divorce is called a “dissolution of marriage,” but for this article we’ll stick with the commonly known term “divorce.”
There are many reasons being attributed to the increase in divorce among older Americans. The old standards of “mid-life crisis” and “we just grew apart” remain consistent. Newer reasons cited include financial and emotional stress, such as from a long-term illness of one spouse now that we are living longer, and the loss of compatibility after children are grown and that common focus is no longer there for the parties.
While many divorces are between spouses married more than 20 years, another phenomenon impacting older citizens is the occurrence of divorce from second and third marriages. As people are living longer and divorce rates rising, more people are entering into second and sometimes even third marriages or more. The rates of divorce for second and third marriages are notably higher than the rate of divorce for first marriages. Statistics vary, but the rate of divorce for first marriages is estimated around 50%, while divorce rates for second marriages is believed to be closer to 65%, with third marriages having even higher rates of divorce.
Whatever the reason, there are several important things to know when considering a divorce later in life. First, Oregon is an “equitable” division jurisdiction, not an “equal” division jurisdiction, so it is not to be assumed that everything will always get split 50/50. The length of the marriage will play an important part in how the assets and debts of a marriage get divided. After a long-term marriage, Oregon law favors a division that allows both parties to leave the marriage on as equal financial footing as possible. A shorter term marriage will have very different asset division and support obligation potential than the longer term marriage. To illustrate some key differences, let’s look at three big issues: real property, retirement accounts, and spousal support.
Real Property – Who keeps the house. A house is commonly the biggest asset to be dealt with in a divorce. Most couples only own one home, so who gets to keep it becomes a major issue. For long-term marriages with the home purchased during the marriage, there may be considerable equity, and both parties usually have equal interest in that equity. If one spouse is not able to “buy out” the other spouse’s interest to keep the house, such as through refinancing or balancing with other assets, the house may have to be sold and proceeds divided so that each spouse gets his or her share.
For shorter term marriages, some factors that impact the division of real property include: whether one spouse owned the house before the marriage, who paid the down payment and where that money came from, how much equity accumulated in the house during the marriage, and again whether the spouse who wants to keep the house can buy out the other spouse’s interest.
Division of Retirement Accounts. There are many types of retirement accounts, and different types of accounts will have specific rules. In general, a spouse is entitled to seek an interest in half the increase in value of the retirement account or pension payments accumulated during the marriage. So, for a long-term marriage where all the proceeds in the retirement account accumulated during the marriage, each spouse could seek interest in half the value of the account at divorce. For shorter marriages, only the increase in value that occurred during the marriage is generally up for division. For example, say a husband has a 401k worth $100,000. If all that balance accumulated during the marriage, then at divorce his wife could seek $50,000 value from that account. In contrast, if $50,000 had accumulated before the marriage and the other $50,000 accumulated during say a five year marriage, then his wife’s interest could be limited to $25,000 of the value from that account.
The type of account, length of the marriage, how the fund accumulated, and how they will be paid out, among other factors, will all impact how a retirement account should be divided at divorce.
Spousal Support. For a long-term marriage, it is common that one spouse was the primary bread winner supporting the family. It is also common in short term marriages, but the options for support are more limited the shorter the marriage. There is no set statutory structure in Oregon for the allocation of spousal support, and each case will be based on the facts and circumstances of the parties. That said, there are several prior decisions made by our courts that provide some basic guidelines. In general, after a long-term marriage the spouse who has the higher ongoing income at divorce will have an obligation to pay monthly support to the other spouse, quite possibly indefinitely. For shorter term marriages, it is common to see such support ordered for approximately half the length of the marriage. This more transitional form of support is also often ordered to start at a higher rate then taper down over a few years before stopping completely.
This has been a very general overview of a very detailed topic. There are many interests at stake and while there are some minor legal issues that you may be able to handle on your own, generally divorce is not one of them. No matter your age but especially later in life, always consult a legal professional before beginning a divorce and as soon as possible if you are the one who gets served with divorce papers.