Todd Palin recently filed for divorce from Sarah Palin, the former governor of Alaska and 2008 Republican vice presidential candidate, after 31 years of marriage. It was another high-profile example of the trend of gray or boomer divorce.
In a document filed in Anchorage, Alaska, Superior Court, Todd Palin cited an “incompatibility of temperament” in his marriage to Sarah Palin “such that they find it impossible to continue to live together as husband and wife.” The divorce filing and court records used only initials to refer to the pair, with Todd Mitchell Palin listed as TMP and Sarah Louise Palin only identified as SLP.
Gray divorces are more common than ever before. A study from the National Center for Family and Marriage found that the U.S. divorce rate for couples age 50 and older doubled between 1990 and 2010, and was even higher for those over 65. In fact, this age3 group is the only one with a divorce rate that is increasing.
The main concern of most people who divorce late in life is whether they will have enough money to live comfortably the rest of their lives. Divorce can drain the coffers of people in their 60s and 70s who may not have a way to rebuild their finances afterward.
Chances are the Palins have enough money for both of them to live separately and thrive. But in almost all gray divorces, issues involving money are the most important, including
Issue #1: What is separate property and what is part of the marital estate.
If you own a baseball card collection before you were married which has appreciated over the years, can you prove this is separate property and shouldn’t be included in the division of your marital assets and liabilities? You could be giving away pre-marital property or separate assets your soon-to-be ex-spouse is not entitled to have.
Issue #2: Inheritances can be tricky.
Inheritances are considered separate property and are typically not subject to distribution in a divorce. They can most certainly have a tremendous impact on your divorce settlement and finances. One way is if they’re co-mingled and turned into marital assets. That can be done in a number of ways and impact the division of your marital estate.
Issue #3: Life Insurance
Anyone owing money to the other party should have life insurance in an amount agreed to in their divorce decree. So now you’re 58 and your term life policy is about to expire. You need to get a new policy with a death benefit and duration to cover your outstanding obligation.
Issue #4: Difficulty dividing pension plans or other retirement accounts.
While many companies are moving away from pension plans in favor of 401(k)’s, state and local governments still offer pension plans to their employees. So if your spouse is a teacher, firefighter, police officer or government official, chances are they have a pension. And it’s probably quite substantial. Now that you’re divorcing, how do you divide such an asset? It’s not like there’s money sitting in an account as with an IRA or 401(k).
A pension is a promise made by an employer to provide an employee a monthly payment (typically) until they pass away. Nowhere in there does it say “provide an employee’s ex-spouse a monthly payment.” For corporate pension plans, it’s a bit more straightforward. Do a PV calculation, determine the Coverture Fraction, get a QDRO, and a separate interest can be created and the pension benefit shared between the parties. When it comes to government pensions, it’s not nearly as straightforward. So if your spouse was a civil servant or government employee, be aware that it may not be as easy to value and share a pension as it would be if they worked in a corporation.
Issue #5: College
In Texas, divorcing parents are not required to pay for their children’s college education, but you can agree to that in the divorce settlement.
Issue #6: Choose the right divorce professional.
Choosing the right divorce professional who understands the problems of a gray divorce is critical to getting an outcome that’s fair, cost-effective and timely.
You can figure Todd and Sarah Palin will have good representation, would you?