By Tammy J. Arquette , Esq .
As the overall divorce rate among
Americans is decreasing, the rate of divorce
among Americans ages 50 and older is on
the rise. A recent study showed that from
1990 to 2009 the divorce rate among Americans
ages 50 and older nearly doubled.
This has been dubbed the “gray divorce.”
It is important to recognize the various
financial concerns that a divorce presents
for couples over the age of 50.
Health insurance is a serious concern
for divorcing adults 50 and older. Once the
parties are divorced, they can no longer
be covered under the same family plan.
Therefore, the parties must consider several options.
Does your employer offer health insurance? Individual health care plans can be expensive, but the usual open enrollment requirements are waived when you have a need for insurance coverage due to divorce.
You may also have the option to continue coverage under your spouse’s plan if you enroll in COBRA, a federal program that provides qualifying individuals, such as divorcing spouses, up to 36 months of continued coverage under a spouse’s employee group health insurance plan. That coverage will end 36 months after the date of divorce. You would have to pay the cost of the insurance coverage, which can e very expensive, or you could negotiate that cost into consideration for the need for spousal maintenance.
Medicare is an option for divorcing spouses ages 65 and older. However, it is important to consider that Medicare coverage is not as good as private coverage, and supplemental coverage is often necessary.
Another option is to obtain a separation agreement as opposed to a divorce. Couples that remain legally married but enter into a separation agreement are generally permitted to continue coverage under their spouse’s plan.
Spousal maintenance, more commonly known as alimony, has undergone several significant changes in the past few years. In 2010 the Domestic Relations Law was amended to establish a formula for determining temporary awards of maintenance from the commencement to the completion of the divorce, based on the spouses’ incomes. Permanent or post-divorce maintenance awards remain in the discretion of the court. New York state takes the approach that spousal maintenance should not continue indefinitely. The spouse receiving maintenance is expected to strive for self-sufficiency. However employment opportunities for adults over the age of 50 may be limited. Spousal maintenance is particularly important for women, since they earn less than men and often have forgone careers to care for the home and children, rendering re-entry into the work force more difficult.
Social Security benefits are not an asset to be divided. However the court will take these benefits into consideration as postdivorce income. Just as with a married individual, a divorced spouse is entitled to receive their own social security benefits based on the earnings history of the former spouse, subject to additional requirements such as: the recipient must be at least 62 years old; the marriage must have lasted at least 10 years; and the amount received must be more than what would be received based on recipient’s own earning record.
Benefits are payable regardless of whether the former spouse is collecting his or her own benefits.
The Social Security Administration will not advise the former spouse of the application for spousal benefits under the former spouse’s earnings history, nor will the former spouse incur a reduction in his or her own benefits.
There are several precautions older couples can take to ensure financial survival after a divorce. The first is to consult with an experienced and reputable divorce attorney as early as possible. Knowing your rights and obligations, as well as what documents and information to collect, will prepare you for the process.
Immediately begin considering your health insurance options. As discussed above, obtaining health insurance can take time, be costly and may result in a lack of coverage for those ages 50-65, which can have serious consequences.
Compile a realistic list of living expenses for your current lifestyle and your anticipated post-divorce lifestyle. Speak to a qualified financial adviser about your current financial status and your anticipated post-divorce financial status.
A divorce later in life means that a divorcing couple will have less time to recover financially, recover their lost assets and retire their debt. Therefore, preparation and representation are key to successfully surviving a divorce after 50.
Tammy J. Arquette, Esq. is a member and owner of The Arquette Law Firm PLLC in Clifton Park.