Better late than never

The divorce rate among pensioners has doubled in the last decade. According to the Office for National Statistics (ONS), nine per cent of those aged over 65 recorded their marital status as divorced in 2011; the year of the last census. The rate was 4.5 per cent ten years earlier.

Fresh data released in July from the ONS has now revealed that more than half of all divorces (53.9 per cent) occur among those aged 60 and over.

Key contributory factors to this trend are that most people are living longer and social norms have changed. Over the past few years, I have certainly seen an increase in instructions from clients who are over 60-years-old and wish to divorce or separate.

Some have had children later in life than previous generations (perhaps in their late 30s and 40s) and decide to separate once the children have grown up. Others feel that they may have another 20 to 25 years to live, and do not want to spend that time with their spouse. There are also more second marriages breaking down among older people, which adds to the increased divorce rate among pensioners.

Delayed impact

The financial impact of divorcing in later years can be significant. Often the couple have worked hard to build up a reasonable amount of wealth; a mortgage-free house, perhaps an investment property, savings and pensions. This then has to be shared between them, usually equally though not always, depending on the circumstances.

It will sometimes mean downsizing, sharing investments, savings and pensions, all of which can result in a dramatic reduction in income and standard of living. In particular, pension income can be reduced by half or more if the aim is to share equal incomes in retirement, and to take into account the life expectancies of the couple.

There can be further complications as annuities cannot yet be shared, unlike drawn down funds. This means that it is sometimes necessary to give one person (usually the wife) more of the house,
or the other investments to compensate her for the loss of income.

It can result in the husband not having enough to buy a reasonable home for himself, perhaps having to move to a cheaper area, needing to rent or stay with adult children. An alternative is that a pension attachment order could be made, which means the husband has to pay his pension income to his ex-wife. However, the advantage of this is that the income ends on his death or on the wife's remarriage.

A tangled web

It is often a shock for adult children to learn of their parents' divorce after what can be many years of marriage. They may feel that their parents were living a lie. They may fear that a new spouse, and not the first family, will inherit their parents' assets.

Indeed under the intestacy rules,
if no will is made, the new spouse would automatically inherit all assets up to £250,000, plus personal possessions, whatever their value, and have an absolute interest in half the remainder of the estate, with the other half being divided equally between the children. Their parent may choose to make a new will that disinherits them or significantly reduces their entitlement.

If, instead of marrying, the divorcee lives with a new partner, and no will is made, the partner would not automatically inherit anything. They would have to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975 and show that they were financially dependent on the deceased at the time of death, and are entitled to reasonable financial provision from the estate for their maintenance.

This can be a distressing and expensive process with uncertainty of outcome, if it cannot be agreed with the stepchildren.

Of course, the super-wealthy won't be affected and it will have little, if any, impact on their lifestyle.

As assets including pensions have to be shared, divorce will naturally affect most couples who divorce before they become pensioners. The difference is that they have time to rebuild their assets, may inherit, and some may combine resources by remarrying or cohabiting.

Richard Phillips is head of family law at IBB Solicitors