14th August 2013
With increasing numbers of over 60s, consumer journalist Jill Insley talks to legal experts about the potential financial consequences and what you can do about it.
First they surfed, now they are separating. While the number of couples of all ages getting divorced has dropped steadily since the mid 1990s, the number of over-60s ending their marriages has increased, leading to a new description for this feisty generation: the “silver splitters”.
In 1991, there were 1.6 divorces per 1,000 married men over 60, and 1.2 per 1,000 women, according to figures collated by the Office for National Statistics. The difference between men and women could be explained by women tending to marry slightly older men.
But 20 years on, the number of men over 60 has risen to 2.3 in every 1,000, while 1.6 in every 1,000 women were wanting to ditch their spouse.
The ONS blames the rise of several factors, including a rise in the number of 60 somethings, increased financial independence for women and a reduction in the stigma previously attached to divorce.
But although the stigma might have decreased, solicitors warn that older divorcees still need to be particularly careful when it comes to breaking up their marriage.
Suzanne Kingston, partner with the family department of Withers, says that people divorcing later on in life are likely to have build up more in the way of assets, including pensions. They may also have children, and firm ideas of how they want their assets to be passed on to their family after their death.
“After living with someone for 40 years, the lines of communication are likely to be quite good,” she says. “Mediation often works well for older people because although there may be considerable bitterness about the marriage breakup, they are less likely to be fiery and more able to see the bigger picture.”
Kingston recommends that one of the first steps should be to get a pension report from an independent financial adviser or accountant specialising in the area, as pensions are likely to form a sizeable part of the settlement. “The pension will be easier to split if it’s not yet paying out, but you need to think about what impact splitting the fund will have, and what sort of income you will have going forward.”
Whatever orders or agreements are drawn up, the recipient should make sure they are enacted promptly, says James Thornton, partner with Stowe Family Law. “The older a person is, the greater the chance they will die before the money is paid over,” he says. If the “payer” dies, the money will still be paid to the recipient; it could just take longer dealing with the deceased’s estate.
It is also imperative to draw up a new will to ensure the assets you extract from your marriage are passed on to the people you care about, rather than your ex. If you remarry, you will have to draw up yet another will, as marriage voids existing wills.
But Thornton strongly recommends against remarry or even living with someone.
“I advise against remarriage. As soon as you remarry your new spouse may have the potential to make financial claims against anything you built up in the first marriage, depending on their financial circumstances. And second time around you are likely to have money,” he says.
There are degrees of claim, he adds: a second spouse will not necessarily be able to claim 50% of your worldly wealth, but if they can prove they have a need of your money – to pay for accommodation for example, the court may dip into the assets you preserved from your first marriage.
Your wishes can be turned over even if you have written a will excluding your new spouse in favour of your children or other beneficiaries.
Pre-nuptial agreements while not completely binding, are pervasive and accorded considerable weight by the courts. They are much more common for second marriages than first, again because the parties involved are more likely to have wealth they want to protect.
Pre-nups can also be a useful back up for a will, showing that the surviving partner previously accepted that he or she would not benefit from their spouse’s wealth built up before their marriage.
Even cohabitation is risky. Divorcees should be very careful, their new partner doesn’t acquire a claim,” says Thornton. “Keep things, the house, investments, savings, even the current account in your sole name.”
He also suggests drawing up a cohabitation agreement to show that while the couple wants to live together, neither is entering the relationship for financial gain. The best solution, says Thornton, is to “spend it all or give it to your kids”.
It seems that distributing your wealth through your lifetime is a good way to avoid arguments whether you divorce or die.