Gray divorce occurs when you are over the age of 55. This type of divorce situation is unique in many ways because it has concerns and considerations that may not be present in a divorce for a younger couple. Typically, a gray divorce does not have concerns over child custody and support, but the focus on property division is more complex.
According to Kiplinger, the length of the marriage is usually what causes the complications in a gray divorce situation because, often, the couple has been together for decades. Splitting one household into two at this point in life is quite complex and often leaves couples with financial strain after the finalization of the divorce. There are many financial aspects to a divorce that become more complicated with an older couple.
More entwined finances
An older couple has more trouble with the division of assets because at this point, they generally both have ownership of overall assets and property under community property laws. It is difficult to separate out the property because of the number of years the couple has been together. They may not even remember what property they owned prior to the marriage, or they may have long ago mingled separate property with marital property.
Closer to retirement
Another major issue is retirement is much closer for these couples. There are specific rules for dividing retirement accounts. How a couple will divide these assets depends on the rules for division, along with the agreement they come to or the court orders. Some accounts require special orders from the judge to divide.
Tax considerations
In addition, there are tax complications that could leave one spouse with a huge tax bill if they do not account for this when dividing assets. This is especially true when it comes to retirement accounts which have separate rules about tax penalties when there is early withdrawal.