In recent years, there has been a notable increase in what is often referred to as ‘grey divorce.’ This term describes couples who decide to part ways later in life, after spending many years together in marriage. However, the concept applies equally to de facto couples who have been together for an extended period. Research conducted by Australian Seniors indicates that nearly one-third of divorces occur among people aged 50 years and older.
The conventional notion of marriage has traditionally emphasised lifelong commitment and endurance. However, societal shifts, evolving gender roles, increased lifespan, and enhanced financial independence have reshaped the relationship landscape.
One of the most common catalysts for grey divorce is empty nest syndrome, which occurs when children move out of the family home. Couples who have dedicated their lives to raising their family may find themselves reassessing their relationship once their children have flown the nest. This period of transition often prompts couples to realise that they may have drifted apart over the years.
The impact of grey divorce extends beyond the emotional toll on the individuals involved. For married or de facto couples, the division of assets, particularly after decades of shared financial responsibilities, can be complex and have significant financial implications for parties.
While divorce is difficult at any age, when it happens later in life, it comes with some unique challenges that are different from those experienced by younger couples. Many people aged 50+ have reached or are close to reaching the peak in their earning capacity and therefore have concerns about the financial setback a separation may cause. It is crucial to handle grey divorces with care, allowing parties to safeguard their existing assets and minimise unnecessary legal costs.
Property settlements and superannuation
The separation process involves two key parts:
- The divorce application, which if granted, legally ends the marriage.
- The property settlement, which divides the matrimonial or de facto property.
When couples decide to separate later in life, superannuation often represents a significant portion of their wealth and becomes a critical asset subject to division. In Australia, superannuation is considered part of the property pool and is subject to the same principles of equitable distribution as other assets in a divorce or separation.
The Family Law Act 1975 (Cth) provides provisions for the fair and equitable division of property, including superannuation, taking into account the following factors:
- The net asset pool available for division,
- The financial, non-financial, homemaker and parental contributions made by each party during the relationship,
- The future needs of the parties, and
- Whether the proposed order would be just and equitable to all parties involved.
Asset Protection
Binding Financial Agreements (BFAs), also known as prenuptial agreements, are legally binding documents that outline the division of a couple’s property and finances in the event of a relationship breakdown. When executed properly, these agreements oust the jurisdiction of the Family Courts and prevent parties from making applications for property orders. Married or de facto couples can enter into a BFA before, during or after separation.
For individuals who are separating later in life, BFAs can offer significant advantages. Over the course of their lives, older parties may have accumulated substantial assets and wealth. By specifying how these assets should be divided in the event of separation, these agreements can help avoid lengthy and costly legal disputes.
One of the key benefits of BFAs is the clarity and certainty they provide. They establish a clear understanding of who owns what, ensuring that post-separation, parties can have peace of mind regarding their future financial standing.
Ultimately, grey divorce presents unique challenges, particularly when it comes to asset division. Engaging the services of a highly experienced and qualified family lawyer is crucial to navigating this complex process in as stress-free a way as possible.
Should you require any advice in relation to separation, divorce, or Binding Financial Agreements, please contact Nicholes Family Lawyers at 03 9670 4122 to arrange an initial consultation.