Silver Separators: Financial Aspects Of Divorce For Over 50s

Going through a divorce is a major life event at any age, but when you decide to end your marriage in later life the financial implications can be significantly more complex.

If you have been married for a long time, you are likely to have accumulated a considerable number of assets, starting with the family home. But dividing up financial assets doesn’t end there: pensions and retirement plans will also come into play.

Matrimonial property

The passage of time can sometimes make it tricky to establish which assets are jointly owned (i.e. ‘matrimonial property’) and which ones were brought into the marriage by one party. For example, if one partner brings with them an inherited property, and 10 years into the marriage that property is extended, and those extensions are paid for jointly, this would be viewed and calculated differently to a family home bought by both parties (even if only one spouse pays the mortgage).

Pensions

Deciding how pension investments will be apportioned between the parties is a crucial factor in divorce arrangements. Not only must you establish who gets what, but also when they get it. Failing to consider pension assets at the time of divorce could have financial ramifications going forward.

Dividing pensions: the options

There are various ways for divorcing couples to divide their pensions:

Offsetting - Pension assets can be offset against the divorcing parties’ other assets. For instance, one party may want to remain in the family home in place of receiving a part of their ex-partner’s pension. Whilst allowing a clean break, this route may not release funds to meet any immediate financial needs you might have.

Pension sharing orders - Pension assets are divided at the time of divorcing. The amount transferred is a percentage of the pension at the date of implementation and not a percentage as at the retirement date. However, this option achieves a clean financial break.

Pension attachment orders - This is where the pension provider of one party pays an agreed amount to the ex-spouse based on the pension value at the date of retirement. However, this risks the loss of future income for the ex-spouse if the person with the pension rights dies before retirement, or if the ex-spouse gets remarried.



Deferred lump sum - This is an order requiring you to pay an amount of your pension lump sum to your ex-partner on retirement. It is your responsibility to pay the lump sum, not your pension provider’s. The order will simply state the date by which you must make the payment. This method achieves a clean break and does not directly affect your pension income, but an agreement like this could dictate when you can take retirement, if you have no other means of paying the lump sum when it becomes due.

© Alex Tate 2021

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For expert guidance on all aspects of your divorce, call solicitor Amanda Vermeulen on 0207 873 2071 / 0121 285 8150 or request a free callback.

The above article is for general guidance only and should not be treated as a definitive guide or be regarded as legal advice. If you require further details or information about the matters referred to in this article, please seek formal legal advice from Amanda Vermeulen Solicitor.

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