Getting divorced after the age of 50 involves unique considerations in New Zealand, thanks to our financial and legal frameworks that differ from other nations.
Also known as ‘grey divorce’, splitting up later in life is a trend on the rise in many countries.
Unlike younger couples who may divorce, those going through grey divorce face unique challenges, particularly related to finances, retirement, and the division of assets that have been accumulated over a longer period.
The Realities of Divorce at This Life Stage
Divorce is never easy, and at this age, it comes with further complexities.
The process of getting divorced in New Zealand is relatively straightforward if both parties agree on the division of property and any child custody arrangements.
However, if there’s disagreement, the costs can rise significantly.
Legal advice from a family law specialist is advisable to navigate the division of assets and liabilities.
One party may be required to provide financial support to the other post-divorce, especially if there’s a significant disparity in income or earning potential. This is assessed on a case-by-case basis.
Post-divorce, it’s crucial to review and adjust life, health, and disability insurance policies. Coverage needs may change, and premiums may increase as you age.
New Zealand’s public health care system provides for many needs, but private health insurance can offer quicker access to certain treatments, which becomes increasingly important as you age.
Asset and Debt Division
New Zealand’s Property (Relationships) Act 1976 governs the division of property for couples separating after the age of 50.
Generally, property acquired during the relationship is considered relationship property and is usually divided equally.
This includes the family home, family chattels, and other assets like retirement savings and pensions accumulated during the relationship.
Just as assets are divided, any debt incurred during the relationship is typically considered relationship debt and shared equally. This includes mortgages, loans, and credit card debts.
While New Zealand does not have capital gains tax that would affect the division of most assets in a divorce, it’s essential to understand any tax obligations or implications arising from the division of property or business interests.
Retirement Planning
One of the most significant impacts of grey divorce is on retirement planning. Couples often plan their retirement with the expectation of shared resources.
Divorce can halve these resources, necessitating a complete reassessment and often a delay in retirement age.
Strategies to mitigate this impact include reassessing your investment strategies, possibly increasing your savings rate, and considering part-time work during retirement.
Special attention should be paid to dividing retirement accounts and pensions, which are considered relationship property if contributions were made during the relationship. The division of these funds must be handled carefully to ensure both parties’ financial security in retirement.
It’s crucial to update your will, enduring powers of attorney, and any trust arrangements after a divorce.
In New Zealand, if you pass away without updating your will, your ex-spouse could still benefit from your estate if they are named in your existing will.
Superannuation schemes and KiwiSaver are considered relationship property if contributions were made during the relationship.
These can be split equally upon separation, although the process for dividing these funds can vary based on the scheme’s rules.
Given the potential difficulties and the need to ensure financial security post-divorce, consulting with a financial advisor who understands the nuances of New Zealand law and retirement planning is advisable.
They can assist with revising your retirement planning, adjusting investment strategies, and ensuring your financial well-being post-divorce.
Each divorce situation is unique, especially when it occurs later in life. It’s important to seek professional advice tailored to your specific circumstances to navigate the financial, legal, and emotional aspects of divorce in New Zealand.
Wealth Has Many Meanings
Financially you might be worried and confused. It’s so normal! But the emotional journey and care for well-being is vital during this time too.
Divorce after 50 is not only a legal and financial challenge but also an emotional one. The end of a long-term relationship can bring about grief, loss, and anxiety about the future.
It’s vital to acknowledge these feelings and seek support through counselling or support groups, which can also help navigate the financial decision-making process with a clearer mind.
