Gray divorce refers to the rise in the divorce rate of older US couples, very often from long-lasting marriages. Divorces among baby boomers have risen dramatically in the past thirty years. If you are fifty or more, statistically, you are more likely to experience divorce. Without proper planning, it can devastate your financial security. Empty nester couples may find raising children was what kept them together. Longer life spans mean dissatisfied couples may be looking at twenty to forty more years in an unhappy marriage.

Faced with just each other’s company, many couples find they have little in common and don’t want to waste precious, vital years in unsatisfactory relationships. Still, gray divorce presents complex issues: 

• Couples are typically near retirement or already retired 
• They have grown children and grandchildren 
• They want to provide a legacy and face a complex division of assets due to a lengthy marriage

Financial security is paramount for both parties, and protecting financial security is crucial in potential future relationships.

The Challenge of Added Financial Obligations

Declining marriage rates and rising cohabitation can present unique challenges for older Americans choosing to re-partner but not remarry. Some new relationships will have to cope with the spousal support obligations of an ex-partner. In some states, due to the length of a marriage, alimony payments have no end date unless the recipient remarries. The added financial burden of spousal support may delay retirement plans or even prompt re-entry into the job market.

Consulting an Estate Planning Attorney Before Divorce

When experiencing a gray divorce, it's important to include your estate planning attorney in pre-divorce decision-making to amend existing plans without completely upending your future financial security. Or, if you are one of the nearly two-thirds of Americans without a will and estate plan, it's time to put a plan together.

Accommodating a new financial reality should give pause to comingling finances with a future partner. Beginning a new romance in your 50s, 60s, or 70s may include:

• Cohabitation agreements
• Financial disclosure, including outstanding debt
• Opting to maintain completely separate finances to protect your existing estate plan and legacy

Addressing these issues will help you participate in a fresh start together. If you have future marriage plans, it is imperative to include a prenuptial agreement to protect your assets, retirement, and legacy.

The Dangers of Commingling Assets and Accounts

Understand that even if you live together for ten or twenty years, common law marriage does not exist simply by cohabitating for seven or ten years. Nothing is automatic about the few states (8 states and the District of Columbia) that recognize common law marriage. Living together without commingling assets and accounts will keep you clear of your partner’s financial responsibilities and liabilities. Maintaining independent banking and credit card accounts includes not making payments or deposits directly into your partner’s accounts, including apps like Venmo.

Cohabitation Agreements

An elder law or family law attorney will be familiar with structuring a cohabitation agreement to protect you from your partner’s debt liability. Your lawyer can also help you assess your partner’s attitude to risk, debt, and credit history. A partner’s poor credit score may still affect couples who maintain separate bank accounts. Honest communication, disclosure of financial paperwork, and a provision of credit history will go a long way to helping you assess if your new partner will put you at financial risk.

A Living Together Contract can address whatever issues you deem necessary but most often include:

• Financial and property clauses – These include property you acquired before your relationship began and property acquired, by either or both of you, during your partnership.
  
  
• Property ownership prior to cohabitation – You may think you will each remember what was yours at the outset of living together. After ten years and referencing belongings in your home as “ours,” recollections may vary as to who owned what.
  
  
• Gifts received or property inherited during the relationship - Most individuals want to keep their inheritance and gifts separate, especially when there are existing estate plans for their children’s inheritance. However, any gift received as a couple is jointly owned.
  
  
• Property purchased during the relationship – Understandably, there will be items you purchase together as a couple. The most important aspect of joint property ownership is maintaining a consistent approach. Identify what property is separately owned, pooled 50-50, or shared in proportion to the contribution in obtaining the property to keep things clear. Put the decision-making information in writing as a record of your property assessments.
  
  
• Expenses – The division of daily living costs like housing, utilities, and food can fall into responsibility categories depending on your relationship structure. You may have one checking account, deposit paycheck or benefit checks into the account to address these bills, and figure it will all even out in time. Or you may opt to split 50-50, keeping accurate records of the daily cost of living expenses and adding up your quarterly contributions to address who spent more. Then you can balance out the expenditures. You can also opt to contribute in proportion to income which is very helpful for those couples with large income discrepancies.
  
  
• Separation or death – Your living together contract can contain a brief outline of protocols as to what happens if someone dies or you choose to split up. Several options are available, and an elder law attorney can create this provisional agreement, ensuring it does not conflict with your existing individual estate plans.
  
  
• Dispute resolution – Every couple with a living together contract must identify a method to resolve potential future disagreements. Mediation is often the first choice for dispute resolution, and your agreement can state who or how you will select a third party to resolve disagreements. The dispute may be submitted for formal and binding arbitration if mediation is unsuccessful. Choosing a method for dispute resolution can avoid the complications and expense of a future lawsuit.
  
  
• Future marriage – a living together contract is enforceable after marriage only if its creation was shortly before your marriage. Meet with your lawyer and bring elements of your living together contract to create a formal prenuptial agreement.

Gray divorce and living together are commonplace. To ensure your financial well-being, be smart about structuring your new relationships. While it may seem less than romantic, you will be better off securing your assets, retirement, future expense obligations, and legacy for family members.