Protecting Your Assets in Later-Life Divorce

 Posted on August 25, 2025 in Asset Division

When divorce happens later in life (often referred to as "gray divorce"), there are major financial concerns that must be addressed. From retirement funds to estate planning, the decisions made during a gray divorce will significantly impact your future, and it is essential to have a clear understanding of the financial implications of the possible divorce settlements you and your spouse could agree to.

In this blog, we will explore some of the most important financial issues that come into play in a gray divorce. If you are facing a divorce later in life, seeking professional legal guidance is essential. Our experienced Novi, MI divorce attorneys are here to provide advice born from many years of experience helping people in your situation.

Understanding the Financial Implications of Gray Divorce

In gray divorce cases, the financial implications are far-reaching. Unlike younger couples, who may have fewer assets and a longer time frame to rebuild their finances, older couples often have more at stake in terms of retirement funds, real estate, and other long-term investments. The division of assets can be far more complicated due to the length of the marriage, the amount and value of assets involved, and the need to ensure that both parties can maintain financial security as they move toward retirement.

Retirement Accounts and Pensions in a Gray Divorce

One of the most significant issues in a gray divorce is how retirement savings will be divided. Both spouses may have built up 401(k)s, IRAs, pensions, and other retirement accounts throughout their marriage, and these assets must be divided equitably during the divorce process. In many cases, retirement assets make up the largest portion of the marital estate.

The division of retirement accounts is typically handled through a legal document called a Qualified Domestic Relations Order (QDRO). This order allows for the distribution of pension funds and other retirement assets between spouses.

When dividing retirement accounts, both spouses should try to make sure, whenever possible, that they are not left with less than they need for their retirement years. This can take careful planning; for example, one spouse may agree to receive a larger share of the house in exchange for a smaller share of the retirement account, but this can have significant tax implications in the future. Consulting a financial planner, as well as your divorce attorney, can help provide clarity on how to best structure the division of assets for retirement security.

Real Estate and Property Division

For many older couples, the family home is one of the most valuable assets. Deciding what happens to the home during a gray divorce can be a complex issue, particularly if one spouse wishes to remain in the house. There are several factors to consider, including the mortgage balance, the home’s market value, and each spouse’s ability to afford the property on their own.

In some cases, one spouse may buy out the other’s interest in the home, or the property may be sold, with the proceeds split between the parties. Another option may be for one spouse to continue living in the house, with the other spouse receiving a larger share of other assets to compensate for their share of the property.

Estate Planning and Beneficiaries

When going through a divorce later in life, it is important to revisit your estate planning documents, including your will, trusts, and beneficiary designations. Many individuals have named their spouse as a beneficiary of life insurance policies, retirement accounts, and other assets. After a divorce, you will need to update these documents to ensure that the correct individuals inherit your assets.

Forgetting to update your will and other estate planning documents can lead to unintended but serious consequences. If your ex-spouse remains as the beneficiary on certain accounts, they may inherit your assets upon your death, even if you no longer want them to do so. Make sure to review all of your estate planning documents after your divorce to ensure that your wishes are accurately reflected.

In addition to updating your estate plan, consider how your assets will impact future generations. If you have children or grandchildren, be sure to address how your assets will be passed down to them in a manner that aligns with your values and intentions.

Alimony

Alimony, or spousal support, is often another important part of a gray divorce. While spousal support is less common in divorces among younger couples, it can be a crucial issue in later-life divorces, particularly when one spouse has significantly lower earning potential or has been out of the workforce for many years. Older spouses who are nearing retirement may find it more difficult to achieve financial independence after divorce.

The length of the marriage, each spouse's financial needs, and their ability to support themselves are factors that a court will consider when determining whether spousal support is appropriate. A judge may order temporary or permanent alimony, depending on the circumstances. If you believe you will need alimony in order to maintain your standard of living, talk about this with your attorney in the beginning stages of planning.

Social Security Benefits

In a gray divorce, Social Security benefits can be an important factor in a financial settlement. One spouse may be entitled to claim a portion of the other spouse’s Social Security benefits based on their work history. This is particularly relevant for individuals who have been married for a long time but who have limited work history or earning capacity.

To claim benefits based on your ex-spouse’s work record, you must have been married for at least 10 years and be at least 62 years old. Social Security benefits can be a valuable asset for those approaching retirement age, and it is important to ensure that both spouses understand what they can expect from this potential source of income.

Call Our Northville, MI Gray Divorce Attorneys Now

If you are facing a grey divorce, look for an attorney with specific experience in handling complex financial issues. With over 23 years of experience in family law, Elkouri Heath, PLC is dedicated to helping you think carefully about finances and planning for the future through every stage of your divorce. Contact our Oakland County family lawyers today at 248-344-9700 to schedule a free consultation.