Silver Splitters, whether you like the term or not, are a growing phenomenon across the world. The term refers to couples who divorce in later life. In the UK, according to the Office for National Statistics, between 2005 to 2015, the number of divorcing men aged 65 and over rose 23%, with a 38% increase for women.
Of course, separating at any stage of life can be a daunting prospect. If it happens to you, you may be very worried about the effect divorce can have on your loved ones, your future and your finances.
Fortunately, at Goughs we have extensive experience of assisting people of all ages, and are no strangers to acting for mature clients.
Remember: you’re not alone. The Office for National Statistics states that the number of divorces in 2016 was highest among both men and women aged 45 to 49.
Moreover, statistics for over 50s show that year on year the number of people divorcing in later life is continuing to increase. There are many reasons for this change. Our family lawyers see many couples drifting apart when their children ‘fly the nest’. It is often a time when people re-evaluate their lives.
Other factors such as financial freedom and greater wealth may mean that couples don’t feel the need to stay with each other as they may have done when they were younger.
Topics to be answered in this article
Why more Silver Splitters?
There is no single reason behind the rise of the Silver Splitter. People are living longer and have a higher expectation of what they want out of life. Often couples who have brought up a family for many years, find the change to an ‘empty nest’ hard on the ongoing relationship. Perhaps an age difference is causing a problem that had previously not been there. Whatever the reason, older couples are divorcing more frequently.
Pitfalls of a later-in-life divorce
Divorce is never easy, either emotionally or financially. When a younger couple decide to separate, they often have fewer assets to split between them and more time ahead of them to earn money, pay a mortgage and create a new life. Older couples divorcing, on the other hand, may be asset rich in terms of a family home or a valuable final salary pension, but have less time ahead of them to remedy any shortfalls elsewhere.
Whilst the aim of a divorce is to split the assets equitably between the couple, this can be problematic if most of those assets are in the form of the family home. If one person wishes to remain in the home, there is the problem of how to compensate the other party. If the family home is to be sold, will there be enough money to fund two smaller homes, especially when later-in-life mortgages may be difficult to obtain? Where the family home is in the sole name of one spouse, it is vital to register for Matrimonial Home Rights with the Land Registry. This will provide you with notification if your spouse attempts to re-mortgage or sell the property.
Issues can arise with splitting a pension, especially if one of the couple is in receipt of the majority of the family income. Final salary pensions can often be the most valuable asset and should not be overlooked.
Dividing pensions equitably
One way to divide assets equitably involves ‘pension offsetting’. In simple terms, one person gets the house (or other major asset), the other gets the majority of the pension. This may sound simple, but issues arise if the person keeping the family home does not have enough income to run the house and survive. Asset rich – cash poor. ‘Pension sharing’ is often a better alternative, where simplistically put, the pension assets of the couple are split. The pension flexibilities introduced in 2015, makes this option more popular than in the past, but it is not a trivial task. Older couples typically have multiple pension types, final salary, defined contribution, and State. There are many options available for dividing pensions as part of a divorce settlement. Legal and financial advice is strongly recommended to avoid unintentional consequences and costly mistakes.
Inheritance Tax, Discretionary Trusts, and Wills
Inheritance tax (IHT) law is something to be considered too. Married couples currently have up to £1 million of IHT protection. After a divorce, this is significantly reduced as it is based on individual IHT protection. Couples who had planned to leave some form of legacy for their children will need to factor this into a divorce settlement. A Discretionary Trust may be of use to help ensure that assets can be ring-fenced for this purpose. If the divorcing couple have Wills, it is strongly recommended to revisit each Will. Where no Will exists, intestacy rules will apply; importantly these differ for those formally divorcing as opposed to simply separating. Getting your wishes correctly implemented in a Will is even more important for Silver Splitters.
For some couples, the complexity, and issues of separating in later life may be too much and they decide to live more separate lifestyles, whilst remaining married, perhaps sharing the family home. For others, a divorce is a vital step in making the most of the remaining years ahead. There is no right or wrong answer, but there are pitfalls.
If you are thinking about leaving your marriage, ensure you seek experienced legal advice from a family lawyer you feel comfortable with. At Goughs, we will work with you to ensure the best outcome for you, your family, and your finances. Contact our specialist family lawyers today to ensure you get the best advice about your situation.