The recession has a greater impact on people older than 50 seeking a divorce, according to Linda Piff, a lawyer in Wall whose practice handles only collaborative and uncontested divorces, mediation and prenuptial agreements.
“It’s a perfect storm where elements beyond the control of the divorcing parties have come together,” Piff said. “A downturn in the economy, loss of value in their retirement
assets and loss of equity in their homes.”
To navigate the storm, Piff advises her clients to be aware of the following recession realities and, with the help of a team of professionals, shows them how to compromise accordingly in the interest of both parties:
Retirement assets depreciated due to stock market downturn. “People over 50 have fewer years to invest and allow those assets to increase in value,” Piff said. “There’s a lot less time for a do-over of investment strategies when people divorce later in life.” If one spouse is collecting pension benefits and did not designate the other party as his or her survivor, that designation cannot be changed because they are getting divorced. “That presents a problem for the spouse who is left behind without a pension benefit,” said Piff. “People over 50 usually haveamore difficult time finding employment,” she said. “If one party is paying alimony and does not have life insurance, the dependent spouse would not receive any money upon the payor’s death,” Piff said. She pointed out that purchasing life insurance can be expensive as a person ages, particularly if the person has medical conditions.
Marital home has lost significant value. Piff said couples can avail themselves of a number of creative solutions to dealing with the real estate downturn when they agree to divorce collaboratively. “They can hold onto the home as business partners after the divorce until it appreciates, rent the home to meet the mortgage payments, do a short sale and not bring money to the closing, refinance before the divorce, or walk away (in a strategic default) if the home is so far under water that it would take them five to 10 years of putting money into the house in order to break even,” she said. Piff uses the services of a collaboratively trained Realtor, appraiser and even a “divorce lender” with Wells Fargo trained to handle refinancing for divorcing couples.
Health insurance. In some instances, continuation of coverage is handled by issuing an agreement of “divorce from bed and board,” which allows the entry of a judgment that technically continues the marriage yet the parties are legally divorced. “This is as close as New Jersey comes to granting a legal separation,” said Piff. She said a divorce from bed and board can only be obtained in an amicable, collaborative divorce. It cannot be part of a litigated determination by a court, but can allow continuing health care coverage under certain plans, COBRA coverage for three years, and coverage for qualified employees and their dependents covered under New Jersey small-employer health benefit plans.
Social Security benefits. “The magic number for Social Security is 10 years,” Piff said, referring to options that allow those married for at least 10 years to collect their spouse’s benefit, either as a survivor or as a partial benefit and later switch to their own earnings to collect a higher benefit. She helps explain the rules related to receiving Social Security benefits and how to divide up those benefits equitably. “It can be complicated,” Piff said, “but if somebody comes in wanting a divorce and tells me they’ve been married nine years and 10 months, I tell them to come back in two months.”
For those planning to remarry, Piff recommends a prenuptial agreement. “I tell them that if they ever marry without one, don’t come back to talk to me about it,” she said.