Divorce rate rising among older couples: how to handle finances

Gone are the days of the seven-year itch. More than half of Australians are divorcing after their mid-40s, and it’s creating fresh money issues.

Senior couples are splitting up at a faster rate, and it’s creating complex problems.

The age of divorcing Australians is rising rapidly, producing more complex financial and emotional challenges for people breaking up later in life.

New Australian Bureau of Statistics data shows the median age of divorcing men jumped from 41.4 to 45.9 years between 2000 and 2021, while for women it rose from 38.6 to 43 years.

The divorce rate of people aged in their fifties and sixties has climbed sharply in the past two decades, and the overall number of divorces climbed 13.6 per cent between 2020 and 2021 to 56,244.

National Seniors Australia says rising numbers of older divorces reflect factors including people marrying later – the median marriage age is over 30, living longer, illness, career changes later in life and a midlife crisis, where one partner becomes romantically involved with a younger person.

“Some couples will divorce once the children have left home, which was a key thing the couple had in common and the primary reason they were staying together,” it says.

Older Australians are divorcing at a greater rate, statistics show.

Equity Trustees estate planning solicitor Susan Bonnici says divorces later in life are typically more expensive and complicated “simply because older divorcees have had more time to accumulate and intertwine their assets”.

“There may be more complex financial structures, such as family trusts, self-managed super funds, business interests or property portfolios that the couple have worked hard to develop during the course of their relationship that will then need to be divided when they divorce,” she says.

“Disentangling these assets and changing ownership structures can be a complicated and expensive process.”

Blended families can also be a big issue in older divorces, and even more complex when second marriages break down.

Older Australians are more likely to have wills and other estate planning documents such as powers of attorney.

Bonnici says, in most states, a divorce does not automatically revoke a will, but it does revoke any clauses that mention the ex-spouse.

“This means that any gifts to the ex-spouse in the will no longer apply and any appointments of the ex-spouse in the will, such as executor or trustee, will also no longer apply, which means new people will need to be appointed to those roles,” she says.

“These automatic revocations may mean that the will is incomplete if it is not reviewed and updated after a divorce.

“In some states of Australia, the appointment of a spouse as a financial attorney, guardian, or medical treatment decision-maker will continue to apply even after a divorce. This is a particular concern for older divorcees who, by virtue of their age, are more likely to need to activate these documents.”

Bonnici says it is also vital to consider assets such as super, insurance, family trusts and companies.

She says divorcing partners should keep communications open, even though this is difficult during separations.

“This is especially so when there are new partners, stepchildren and blended families involved.”

Divorces can get messier when there are more assets involved.

Australian Family Lawyers principal lawyer Justin Dowd says divorcing older couples may have less financial and personal resilience to recover “so there is increased uncertainty as to the future and concern about the outcome”.

“Against that, older couples can be more settled and resigned to the situation and be more willing to be more accepting of the inevitable, with a wider world view as to what is important and what is not, including possibly arguing significantly in the family law system,” he says.

Dowd says older Australians need to consider their financial security, superannuation and tax components of a financial settlement, arrangements for children and succession planning in wills and superannuation.

“Get good legal advice, and consider the goals you are planning to achieve,” he says.

“Work out with your lawyer the best way to reach those goals, trying to keep the emotions within check as those goals are set. Have your lawyer liaise with your accountant and/or financial planner about your future security.”

SIX THINGS TO THINK ABOUT

• What are your incomes, assets and debts? Do a financial audit to check you have enough money to cover day-to-day expenses.

• Be careful and disciplined with debt, as divorce can make repayments much tougher.

• Review and update your will, insurance and superannuation. Ensure beneficiaries are protected in line with your wishes.

• Watch your credit rating and ensure only your name is on bills and loans you are responsible for.

• What professional advice will you need? Family lawyers, estate planning lawyers and financial advisers may all play roles.

• How quickly can the split be resolved? Avoid procrastination where possible.

Source: National Seniors Australia, Equity Trustees