Common Issues in a “Gray Divorce” in Tennessee

A “gray divorce” is an informal term used for the dissolution of a marriage for individuals aged 50 or older. While the legal process in Tennessee remains consistent regardless of age, individuals in this demographic often face a unique set of financial and emotional hurdles. Because there is typically less time to recover financially before retirement, these cases can require a focus on long-term security.

In Middle Tennessee, particularly in affluent areas like Brentwood and Franklin, marital estates often include significant retirement accounts, complex business interests, and high-value real estate. Unlike younger couples who have decades to rebuild their wealth, older spouses have fewer working years remaining to make up for a financial shortfall after a divorce. The following are some divorce issues and areas of consideration for older couples going through a divorce.  

Divorce issues: Equitable Distribution vs. Equal Split

It is a common misconception that assets are always split 50/50. Tennessee is an “equitable distribution” state, meaning the court divides marital property in a manner that is determined to be equitable, or fair, to both parties. Judges consider many factors, including the duration of the marriage, each spouse’s contributions (both financial and non-financial), and their respective earning capacities. A full list of the statutory factors to be considered by the Court can be found here.

Dividing Retirement Accounts and Pensions

For many couples approaching retirement, retirement funds represent a primary source of wealth and potential the marital estate’s largest asset(s). Dividing 401(k)s, IRAs, or traditional pensions is not as simple as withdrawing cash. To split these assets without incurring immediate tax penalties or early withdrawal fees, the court must issue a Qualified Domestic Relations Order (QDRO). This legal instrument allows for the distribution of retirement assets between spouses while preserving their tax-deferred status.

Alimony and Long-Term Spousal Support

In long-term marriages, there is often a significant disparity in earning capacity, especially if one spouse sacrificed their own career advancement to support the family or manage the household. Tennessee courts recognize several types of alimony to address these imbalances:

• Alimony in Futuro: Often awarded in long-term marriages where one spouse cannot reach the standard of living enjoyed during the marriage. This form of alimony typically lasts until the death of either spouse, or the remarriage of the needy spouse.

• Transitional Alimony: Designed to help a spouse adjust to the economic consequences of divorce. This form of alimony is typically for a set amount or duration, and is designed to assist the spouse in need to transition into a better financial situation post-divorce.

Unlike child support, which uses a formula with specific variables to reach to an amount, alimony is determined after the court considers several factors, including the amount of money needed by one spouse and the ability of the other spouse to pay (i.e., the obligee spouse’s monthly deficit and the obligor spouse’s monthly surplus).

The Marital Home and Real Estate

The family home is often the most emotionally charged asset in a gray divorce. However, the decision to keep the home must be balanced against cold financial realities.

• The Buy-Out Dilemma: One spouse may wish to stay in the home, requiring them to "buy out" the other’s interest. This often involves refinancing the mortgage or trade-offs with other assets, such as retirement accounts.

• Maintenance and Liquidity: Even if a spouse can afford the mortgage, the cost of maintaining a large property on a single, post-retirement income can be prohibitive. In many cases, downsizing becomes the more sustainable long-term strategy.

Healthcare and Insurance Gaps

One potentially overlooked risk in a gray divorce is the healthcare gap. Many spouses lose their health insurance coverage if it was provided through their partner’s employer. For those under 65, navigating the cost of COBRA or finding a plan through the Affordable Care Act (ACA) is essential. If you are approaching 65, you must carefully coordinate your divorce timing and settlement to ensure you have continuous coverage until Medicare eligibility.

Updating Your Estate Plan

A gray divorce fundamentally changes your legacy. Once the marriage is dissolved, your prior estate planning documents may no longer reflect your wishes. It is vital to review and update wills, powers of attorney, and beneficiary designations on life insurance policies and retirement accounts. Proper planning ensures that assets intended for children or grandchildren from the marriage remain protected and are not inadvertently diverted due to the divorce.

The Value of an Attorney

If you are considering a divorce later in life, securing your financial future starts with informed advocacy. Contact Lee Jackson Law today for a confidential consultation and let us help you understand your options and protect your future.

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5115 Maryland Way, Suite 301, Brentwood, TN 37027