According to research, March is the most popular month to file for divorce. This past March, however, we also began dealing with the COVID-19 pandemic and self-quarantining. Most families have had to endure financial hardship, childcare issues and the inability to live life outside their homes. These massive disruptions to daily living and finances undoubtedly increase strains that would shatter any seemingly perfect marriage.
Here is what I see happening in the context of divorces.
Being In Limbo
Couples who were well into the process of divorcing are right now living in limbo—after months or maybe years of negotiating a split, they now have to wait even longer to get in front of the court to have closure on orders for custody, access, support and the division of marital property. Previously negotiated deals may be difficult to honor. Disputes may become prolonged without the courts, which have been closed except in cases of emergency and essential actions.
The stock market, meanwhile, has suffered both a downturn and fluctuating asset values, leaving splitting couples with crushing anxiety about which date to pick for executing their property division. It’s hard for them to know when to sell a marital home. Small business owner spouses might be experiencing a high risk of loss and bankruptcy. Support obligations are stretched to the limit because primary breadwinners are facing unemployment. Parenting situations can change if one parent is keeping children full time during self-isolation and needs greater financial support.
COVID-19 has created an environment of tension, fear and panic for many divorcing families in many areas including finances.
The divorce rate has nearly doubled for adults over 50 since the 1990s. And for adults 65 and older, the rate has tripled in that time, a trend often referred to as “gray divorce.” Fifty-five percent of that group, also known as “silver splitters,” are leaving their first marriages—long-term unions that had lasted more than 20 years.
With people living longer, it makes sense that they don’t want to spend their retirement years in unhappy unions. But those divorcing later in life face unique financial challenges. Older couples worry more about whether their income will be sufficient if it’s divided between two households. They are also concerned about outliving their assets, about their financial independence and about being alone. The majority are unlikely to recoup financial losses associated with divorce.
Those getting divorced later are likely to have a smaller economic cushion at the same time they face a longer life expectancy. Their income will likely be uncertain at the same time they’re dealing with health-care costs and increasingly complex family obligations for varying dependents—adult children and elders, for example. They may or may not be doing this with personal financial acumen.
Remarriage In Late Life
More people are getting married after 50 than ever before. According to Pew, adults age 55 and older accounted for 33% of the total number of remarriages in 2013 (whether the marriages were second, third or beyond).
Older adults who remarry surprisingly shy away from wealth protection vehicles. Part of this stems from a social stigma against pre- and postnuptial agreements and the overall discussion of finances.
Challenges During COVID-19
When people decide to get divorced on the cusp of retirement, it not only exposes any faux pas they might have made in their marriages but missteps they’ve made in their planning for retirement as well.
In good financial times, such missteps are easily overlooked. when an income stream stops or differences in spending habits become obvious enough, the jig is up.
Economic planning involves a comprehensive analysis of the division of property, child support, and alimony as well as the anticipation of various scenarios and projections for settlement. But since everything is currently up in the air during the coronavirus turmoil, divorcing couples are feeling overwhelmed and are at greater risk for making knee-jerk decisions to manage among other things their finances. Their short-term plans may feel much more tentative: Will their kids be going off to college in the fall? When should they put their houses up for sale? Can they go back to work? How do they take care of elder parents?
Divorcing couples need comfort in dealing with new contingencies.
Your attorney is your resource. I routinely direct that my clients discuss the following areas with a financial planner/advisor:
1. Cash flow needs and sources of emergency liquidity.Clients must maximize the value of every dollar and cut expenses.
2. Remaining work years and pushing back retirement.Clients will likely have to replenish their savings.
3. Social Security benefits and claiming strategies.Clients may desperately need this income now.
4. Distribution of marital property, especially retirement assets. Clients shouldn’t sell investments out of fear.
5. Debt relief options. Clients might want to take advantage of low interest rates and focus on improving their credit ratings and finances.
Ronald Lieberman, Esq. is a shareholder and partner at Adinolfi, Lieberman, Burick, Falkenstein, Roberto & Molotsky, PA in Haddonfield New Jersey. He represents clients seeking divorce in New Jersey or dealing with any sensitive family law matter. Mr. Lieberman is a Certified Matrimonial Attorney by the New Jersey Supreme Court and the current Chair of the New Jersey Family Law Executive Committee.