Financial Advisors’ Advice for Seniors in This Era Where They Face Greater Likelihood of Divorce

Divorce among seniors has been on the rise. In fact, between 1990 and 2009, the divorce rate among seniors doubled. Even for seniors over 65 years old.

Divorce is 2.5 times more likely in a second (or greater) marriage than in a first marriage. So these trends are likely to become even more pronounced over time.

And with this trend, financial advisors are, and have to be more mindful of divorce among seniors. They point out that it is more important than ever that seniors take logical, practical steps to protect their own financial interests.

For example, living expenses for a single person may be greater than simply half of their previous expenses as a couple. And the newly single may have extra one-time or infrequent expenses that they must incur upon separation and/or divorce (a new will and health care surrogate, new insurance, new accountant, new insurance agent, etc.)

Divorcing seniors typically have accumulated significant assets worth protecting. They should take advantage of professional service providers. But, if possible, they should strive for an amicable divorce.

Financial advisors may go so far as to recommend foregoing attorneys. That may be pennywise but pound foolish though.

If both spouses are inclined to divorce amicably, their divorce need not be litigious or expensive. But attorneys are the only professionals who can ensure that everything is done legally and fairly, with neither spouse being taken advantage of.

Financial advisors recommend getting copies of all financial documents and securing your copies in a safe location. True, of course.

But if one spouse refuses to provide copies or denies the existence of known assets, then the other spouse will likely need a lawyer. This doesn’t mean that their divorce will not end amicably, but it is a red flag that should raise concerns. Blindly ignoring it in pursuit of an amicable divorce no matter what, is a recipe for disaster – and regret.

A fair settlement requires disclosure. There is simply no getting around that fact.

Financial advisors recommend closing joint accounts immediately and replacing them with individual accounts as soon as the spouses separate.

They also remind that assets and debt need to be put into the correct spouse’s name.

Financial advisors recommend splitting each financial asset, so that both spouses face the same market risks and tax risks. This advice has some merit, but it is often resisted by both spouses.

Financial professionals quite properly advocate that a spouse who is required to make payments over time (whether alimony and spousal support, or property division equalization payments in installments) have not only life insurance but also disability insurance to protect the receiving spouse. Disability at a relatively young age is a much greater risk than most people realize. And jeopardizes both spouses and their children’s well-being.

For individuals who have amassed significant assets prior to marriage, it is important for them to take reasonable steps to ensure that those assets remain nonmarital. These steps include a prenuptial agreement but also maintaining title in the individual’s sole name and really keeping the asset separate, that is, without commingling it with the other spouse’s assets or other joint assets, or applying it directly to common household expenses.

Read more in this US News & World Report – Money article: Financial Safeguards Needed as Senior Divorces Soar.