For various reasons, more people aged above 50 are divorcing – a reflection perhaps of ageing and changing attitudes towards splitting up. Whatever the causes, it raises a number of questions for advisors working with those involved.

Divorce can happen at all stages of adulthood. For those where marriage ends after 50, and where significant financial implications arise, splits bring particular challenges for the parties involved and those who advise them. To consider the topic is Jo Carr-West (pictured below), a partner at Hunters Law.

As this article demonstrates, divorce, while a (mostly) difficult topic for those experiencing it, is an important area for those in the private client and wealth advisory community to understand. Guest articles from outside contributors are helpful for encouraging conversations and we welcome this article. The usual editorial disclaimers apply. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

Jo Carr-West 
 

Divorce among the over-50s has increased steadily in recent years. Office for National Statistics data indicates that this age group now accounts for more than a third of all divorces in England and Wales. It is likely that this trend is driven by a combination of increased life expectancy, evolving social attitudes to divorce, and the fact that younger generations marry later or not at all. For many couples, the prospect of spending 20 or 30 more years in an unhappy relationship is increasingly viewed as untenable, particularly once children have grown up and left home or the parties are contemplating retirement.

Later-life divorce raises issues that often differ materially from those encountered earlier in a client’s life. By this stage, couples typically have accumulated substantial assets and made long-term financial decisions that may now be irreversible. One spouse may have compromised their career to support family life, significant capital may have been deployed on school fees, financial commitments may extend to adult children or to older generations, or retirement plans may already be in motion. The margin for error is often smaller, with limited time or earning capacity available to rebuild wealth.

This presents a distinct set of challenges that cannot be addressed effectively by legal or financial advice in isolation. Family lawyers and financial advisors each bring essential expertise: lawyers on how the principle of fairness is understood and the benefits of different settlement structures, while financial advisors play a critical role in stress-testing potential settlements through cashflow modelling and advising on available financial products from pensions and investment portfolios to insurance and income-generating structures. Early collaboration between professionals can help ensure that settlements reached are both legally sound and financially robust.

Property is frequently the most immediate concern. Clients may have assumed that the family home would be retained until the children have flown the nest. Divorce can force an earlier sale, with equity needing to be split and redeployed to fund two separate households, rather than, for example, helping children on to the property ladder as may have been planned. At this stage of life, mortgage options may be constrained by age, income profile or employment status, increasing pressure on liquid assets and potentially altering long-term investment strategies.

Retirement planning must also be reassessed, creating a need for financial recalibration at precisely the point when clients had expected their plans to be largely settled. 

Pensions are often among the most valuable, and most overlooked, assets in divorce. Research from the Money & Pensions Service indicates that only 43 per cent of UK adults are aware that a former partner’s pension can form part of a divorce settlement. Yet pensions can be shared, or their value offset against other assets, with significant consequences for future income and tax outcomes. In some cases, for those who are able, drawing down a pension cash lump sum can increase liquidity and help to meet immediate financial needs.

Valuing pensions can be complex and frequently requires specialist input. Decisions on whether pensions are treated as capital or income can impact outcomes, especially for clients in their 50s who are not yet retired but for whom retirement is clearly in sight. Where there is a significant age gap between spouses, or a mix of different pension types, expert advice from a pensions on divorce expert is essential to avoid unintended disparities in retirement income. 

Income planning also requires careful consideration. Courts increasingly expect financially weaker spouses to maximise their earning capacity, even later in life, albeit often for a limited period. Advisors may therefore support clients who are returning to work, retraining, or restructuring portfolios to supplement earned income during the transition.

Tax efficiency should run as a consistent thread through all these considerations. The division of assets should not be assessed solely by reference to headline values. How assets are structured, transferred and retained post-divorce can have long-term tax implications that materially affect financial security in retirement.

Where there is still a degree of trust and constructive communication between spouses, there can be benefits in a financial advisor working with both parties during the divorce process. In such cases, and particularly where the clients are using an option such as mediation or a “one couple one lawyer,” the advisor may act as a “financial neutral,” providing joint financial information, cashflow modelling and projections that allow both spouses, and the legal professionals involved, to assess the practical implications of different settlement options.

Divorce after 50 represents a pivotal moment for clients and their advisors. With constructive collaboration between family lawyers, wealth managers and other specialists, it is possible to help clients deal with the immediate disruption while preserving long-term financial resilience and confidence in the next stage of life.