Research shows that the divorce rate for adults 50 and older has roughly doubled in the last 25 years. These late life divorces can be particularly difficult financially because less money is coming in due to retirement while certain expenses are going up, such as health care. Women are especially likely to face financial insecurity following a divorce.
A recent article on Forbes.com discussed how divorce can impact retirement. Some retirees have been forced to increase withdrawals from their retirement plans and incur more debt in order to maintain a household, cover costs, and provide support for adult children or parents. In addition, there is the emotional and financial stress of dividing up assets that may have taken a lifetime to accumulate. On top of this are the costs incurred to litigate a divorce matter, which can have a significant financial impact.
In a litigated divorce, the parties will often have their own financial experts to advocate for their position, but that can result in more money being spent as these experts battle each other. Collaborative divorce provides an alternative to this that can help address some of the cost, emotional and financial issues that often come up in a divorce. In a collaborative divorce, the parties still have their own lawyers, but they collectively work with a team of advisors to come to a resolution that works for everyone. This is one of the key advantages of a collaborative divorce process. These advisors include a financial neutral to analyze and report on financial options for both parties. The financial neutral provides detailed financial planning, organizes documents and explains current and projected income, assets and liabilities. By explaining the options available to the parties, spouses can come to an informed and amicable financial settlement.
A collaborative divorce can’t eliminate the financial impact of a divorce. However, it can help the spouses understand the consequences of their financial decisions and prepare for a new economic reality. It can also reduce the costs and stress of getting a divorce. Collaborative divorce is not right for every person, but spouses should investigate whether it would work for them.
If you are thinking about divorce, contact me to discuss your options.
