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Financial concerns with gray divorces

On Behalf of | Apr 6, 2022 | Divorce

Older persons may go through a divorce, and children and other family members might feel shocked. Yet, it is not uncommon for people over age 50 to end a marriage lasting many decades. Times and circumstances change, and people grow apart. In Michigan, finalizing a gray divorce might be more complex than other proceedings due to additional financial considerations.

Financial concerns after divorce

When two spouses live together, their financial situation may become intertwined even when only recently married. Often, both spouses combine income and assets to budget their lives. However, one spouse might earn significantly more than the other and maintain a higher earning potential. So, asset distribution and spousal support could become critical aspects of divorce proceedings.

Alimony could help a spouse deal with the transition to single life. The monthly payments could cover housing, food, and other costs. Negotiating a reasonable alimony amount, combined with an equitable settlement amount, could leave both parties in a positive situation when the marriage ends.

Spouses should understand the tax consequences of alimony. While alimony is no longer taxable, it is also not tax-deductible. That could affect the payer’s financial situation.

Staying ahead of financial and estate matters

Revisiting estate planning might be necessary long before the divorce finalizes. Those who don’t change their estate plans may find the original documents legally valid. Heirs might be unable to reverse what a will or beneficiary designation says, so it may seem wise to make changes without delays.

Budgets might require alterations, as well. Single life may come with more financial challenges, and downscaling a budget could make the transition less stressful. In time, if a financial situation improves, returning to a previous lifestyle could be possible.