Divorce + Recession + Retirement = Oh, My!

4. Caregiving complications. Two-thirds (66%) of caregivers are women, according to the National Family Caregivers Association. As parents (or in some cases, beloved ex-parents-in-law) become frail, divorcées may end up with unexpected financial and emotional burdens.

5. Sentiment versus logic. Amid a change of circumstances that can seem strange and scary, many divorcing women cling to a familiar asset that may remind them of the best of their old marriage: the family home. When a divorcing client of Linda Gross’ wanted to continue living in her house, her retired husband pointed out that its equity was worth $1 million. “He felt it should count as a million-dollar settlement, but the judge can’t order her to sell it,” Gross says. Despite the sentimental value of assets like a home, women may need to make trade-offs to avoid a dramatic drop in their standard of living.

6. Dividing assets that need to last a lifetime. The increase in retiree divorce will lead to more dilemmas about how to treat assets meant to generate lifetime income. For example, Gross says, if income is “available” but withdrawal is discretionary (i.e., a Roth IRA or reverse mortgage), should a divorce court judge tell the account owner, “Based on your life expectancy of X years, you should take out so much per month for a settlement”? Obviously, the withdrawal rate can’t be left to the discretion of an ex-spouse who would rather take out nothing, but how can the judge decide?

“It’s a very hard time in life,” Van Oorschot sums up. “How do we make the money work to minimize this very distasteful reality? I find, being a lawyer, that people hope we can create magic. But we’re stuck with the hard realities of the situation. We try to help our clients make the best decisions possible within that reality.”

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