The Mid-Life Divorce: Don't Get Taken, Don't Get Even

It’s the gray liberation movement: One in four divorces are now initiated by either a Baby Boomer or the generation before them.

Even as younger generations stay married a little longer, people over 50 are divorcing twice as often as 25 years ago. The reason’s pretty simple, says Bowling Green State University sociologist Susan Brown -- people expect to live longer and are less willing to endure a blah or bad marriage. Many men remarry after a divorce, but older women tend to stay single. “Men want to be taken care of,” Brown says. “And women are tired of taking care of men.”

But a declaration of independence can be disastrously expensive. The closer to retirement a divorce occurs, the less time there is to recover. Older divorcees have just a fifth of the wealth that older married couples have, Brown’s research shows. So couples need to find ways to end their marriage without wiping out their net worth.

“You definitely want to avoid a knock-down, drag-out, six-month courtroom battle,” says attorney Ann Margaret Carrozza. Getting mad may be inevitable, but getting even can be costly. Too often, spouses bent on revenge hurt their own interests, says Bruce Hoffmeister, a Wilmington Trust planner and attorney. They might, for example, force the sale of a business that kicks off lots of cash.

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Going too far in the other direction to ensure peace isn’t a great strategy either, Carrozza says. Someone who helped put a wife or husband through med school really ought to demand a share of that doctor’s paycheck. And, it can be smart to hire an independent appraiser or even a forensic accountant to sort out what everything’s really worth. Spouses sometimes hide money from each other, using hard-to-value businesses as shields. One man was reporting a salary of $500,000, while taking home an extra $1.5 million as fake business expenses that his wife and the IRS didn’t know about. (See: Hunting for Hidden Cash In Divorce Proceedings)

Divorce often means lifestyles need to shrink. Divorced couples end up with two houses, two utility bills and an end to married discounts like the mobile phone family plan or breaks on insurance. And each gets about half as much to pay for their share. That leaves less money to reboot a social life.

The newly single can also hurt their finances by letting themselves make extravagant purchases: Freed from a stingy spouse, they finally get to buy that sports car or redo the kitchen.

A house is by far the most valuable thing that many older couples own. That, and the home’s sentimental value, can make it a battleground between spouses. But women in particular commonly bargain for the house without realizing the full costs of ownership. Many would be better off selling it off. With children grown, they would have been due to downsize anyway.

Couples who’ve grown distant but still get along don’t always need to move out. Many older couples are using post-nuptial agreements to stay together, Carrozza and Hoffmeister say. A post-nup is a formal deal struck between spouses that lays out rules of the relationship -- and how property will be divided if they’re not followed.

For a platonic couple that wants to share a house, but also wants the freedom to pursue their own social lives, a post-nup might include rules like not bringing dates to family functions, and no dates who sleep over. A husband who cheated on his wife might agree to a post-nup as a way to win back her trust. It might promise her a big divorce payout if he cheats again.

If the marriage can’t be saved, the worst possible move is to divorce and remarry without a pre-nuptial agreement, advisers say. Second marriages are far more likely to end in divorce than first marriages. To divide up a nest egg once is expensive. Splitting it up a second time may leave you with no nest at all.

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