Pensions  

How to help older couples who are splitting up

  • Describe some of the challenges of getting divorced in retirement
  • Identify the role of a financial adviser in the process
  • Describe the challenges with defined benefit pensions
CPD
Approx.30min
How to help older couples who are splitting up
 Pexels/Burak Kostak

In England and Wales, divorce is in decline – our most recent 10 years of data show a 28 per cent fall in the number of divorces between 2005 and 2015. 

But older people are bucking the trend. In the same period, the number of men divorcing aged 65 and over went up by 23 per cent and the number of women of the same age divorcing increased by 38 per cent. In July 2015, data showed that 54 per cent of all divorces were amongst people aged 60 or over.  

 Dealing with a divorce at 40 is hard enough, but to try to do it at 80 can be devastating, particularly if the client has lost their main support network of spouse and children. They may also have effectively lost their main carer and be dealing with deep and substantial emotional stress as a result.

 It is therefore increasingly important for advisers to be aware of the particular issues which arise when a couple are separating at a late stage of their lives. 

 The importance of legal advice

 There is no substitute for individual, specialist, legal advice. Even where a couple has reached an agreement as to how they plan to split their assets, they will need a solicitor to draw up the paperwork and help ensure all the technical aspects are covered.

 Remaining mindful of capacity 

 Capacity is certainly something which needs to be borne in mind with the older the client.  

 It is key that a client is able to give clear instructions. Cases where there are capacity, as well as general health, issues can be particularly distressing for all those involved and it is worth clients thinking about such matters well in advance, where possible.  

 In simple terms, there is an assumption of capacity unless a medical assessment shows that an individual lacks capacity. If that were to occur, a litigation friend might need to be appointed, usually a family member or close friend who can assist them.  

 The field of powers of attorney is a complex one, but it is worth noting that lasting powers of attorney in relation to property and affairs or personal welfare need to be put in place before a person loses capacity. If an attorney is not appointed then a deputy may need to be appointed after the person loses capacity, but it is clearly preferable that the individual concerned should choose who can make such decisions for them.  

 Capacity issues will not prevent a divorce, but it certainly adds a degree of complexity to what is likely already to be a difficult situation.   

 Understanding the financial consequences of divorce 

 On divorce, the court has a free hand to redistribute the assets of either party in whatever manner is necessary to provide a ‘fair’ result. Anything owned by either spouse is available for distribution to the other. 

 The disclosure process

 The first stage of the process requires both parties to provide an accurate and comprehensive summary of their financial position. Clients are required to complete a financial disclosure document – known as a Form E.