The average age for getting divorced in England and Wales is 46.9 years for men and 44.5 years for women, and on average, those that do divorce do so after 12.5 years of marriage. These statistics make sense – it is now well-recognised that happiness dips in our mid-40s , only to rise again in our fifth decade. The mid-40s is also when many people are juggling children, elderly parents, and work, leaving little time for nurturing a marriage. But if a couple moves past these difficult years and remains together, we assume they have made it and can look forward to a happy retirement in wedded bliss.

Unfortunately, couples can and do divorce later in life. The recent shock announcement that Bill and Melinda Gates have decided to divorce after 27 years of marriage is a recent example. And when people divorce later in life, the financial settlement aspect of the process can prove highly complex, as there has been time to build wealth and there are the inheritances of adult children to consider. Divorce after 60 often involves dividing a greater amount of assets — such as the family home, overseas property, family businesses, pensions, maintenance, and tax planning.

For those divorcing after 60, below are some of the main things to consider.

Pensions

If you are approaching retirement, dividing your pension will be your top consideration. In July 2019, the Pension Advisory Group (PAG) released a report entitled, A guide to the treatment of pensions on divorce . The paper was endorsed by Sir Andrew McFarlane, President of the Family Division and the contained guidance is considered best practice when it comes to dividing pensions.

There are three main ways pensions are allocated in the event of a divorce:

· Offsetting – the value of pension assets is offset against other assets such as property. A common solution is one partner takes a lesser share of any pensions in favour of staying in the family home.

· Pension Sharing Orders – the clean break solution. Pension assets are divided (not necessarily equally) at the time of divorce.

· Pension Attachment Orders (formally known as earmarking) – the Court will make a Pension Attachment Order providing for a portion of one party’s pension to be set aside for their ex-spouse. The ex-spouse will receive their percentage when the pension starts being paid out. This option comes with risks as the receiving spouse will get nothing if the pension owner dies before the date the pension assets start to be paid.

There are other options such as deferred pension sharing or lump sum payments that may also be considered. Your Family Law Solicitor will go through all the possibilities and advise which one is best for your circumstances.

Tax

Dividing a lifetime worth of assets that have had ample time to mature will likely result in tax implications such as Capital Gains Tax on buy to let properties and/or investments. Another consideration is the impact of dividing property and assets on any Inheritance Tax planning you have in place.

Beware of financial hardship

Divorcing later in life can dramatically affect your wealth at a time when financial security is needed most. When negotiating your financial settlement, you need to think about your future health needs, the lifestyle you plan to enjoy in retirement, and the possibility of meeting a new partner.

Women need to take particular care when choosing a Family Lawyer as research by the Pensions Policy Institute found the average divorced woman has less than a third of the pension wealth of the average divorced man. This is because a greater percentage of women take breaks in their careers to look after children and elderly parents. Even when they return to employment, women are more likely than men to work part-time.

In summary

The financial implications of divorcing later in life are usually greater than that of someone in their 30s or even 40s as younger people still have time to re-build wealth. The key to ensuring you retain, at least to some extent, your pre-divorce standard of living, is to speak with an experienced divorce lawyer who understands how to negotiate financial settlements consisting of considerable assets and property.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.