Divorce after the children have grown up and left home is often described as an “empty-nest divorce.” An empty-nest divorce often occurs when couples who have steadily grown apart begin to reassess how they want to live the next stage of their lives.

Empty-nest divorce is one experience often associated with the broader increase in gray divorce. The phrase “empty-nest divorce” may sound simplistic, but the legal and financial reality can be complicated. Although these divorcing couples may have reduced day-to-day parenting responsibilities, they may face more complex property, retirement, tax, health-insurance, and housing decisions.

The end of active parenting can also reveal problems that were easier to ignore when the children were younger. A couple may have stayed together for years for the sake of the children, but once the children leave, those reasons may no longer exist.

Why Divorce After Children Leave Home Can Be Different

A later-in-life divorce often follows a long marriage. The spouses may have accumulated significant retirement accounts, real estate, business interests, life insurance, deferred compensation, stock options, and other assets that did not exist at the beginning of the marriage.

Depending on their ages, the divorcing couple might have less time to recover financially after divorce, whereas a younger spouse might have decades to rebuild retirement savings. Someone divorcing in their fifties, sixties, or later may need to make significant adjustments concerning housing, health insurance, employment, and retirement.

The absence of minor children will usually eliminate custody and parenting-time issues, but it does not necessarily eliminate financial responsibilities to adult children. Parents may continue helping adult children with college, weddings, housing, health expenses, and other costs. These family commitments should be discussed during settlement negotiations and addressed clearly in the Divorce Settlement Agreement when appropriate.

The Marital Home and the Empty Nest

The marital home might have been originally purchased for a specific school district or to accommodate a growing family. After the children leave, the home may be too large, too expensive to maintain, and impractical for either spouse to keep on their own.

Selling the home may release substantial equity, but it can also create tax, moving, transaction, and emotional costs. Keeping it may provide stability, but only if the spouse who keeps it can afford the mortgage, real estate taxes, homeowners’ insurance, HOA fees, repairs, and ordinary day-to-day living expenses.

Settlement negotiations should determine as early as possible whether the spouse who wants to keep the home can: (1) buy-out the other spouse’s share of the equity, (2) qualify for a mortgage refinance in that spouse’s own name, and (3) afford the ongoing costs of ownership.

The spouse who remains in the home should also consider whether doing so is financially sustainable over the long term. A home that can be maintained for the first year after divorce may become unaffordable later if support payments change, employment ends, taxes increase, or major repairs are needed.

Retirement Accounts and Future Income

Along with the marital home, retirement accounts are often one of the largest assets in a long marriage. The parties may need to carefully evaluate pension plans, 401(k) accounts, IRAs, deferred compensation, and potential Social Security benefits.

A dollar in a traditional 401(k) or traditional IRA is not equivalent to a dollar in a bank or brokerage account. The retirement account may generate ordinary-income tax when distributions are taken, and early withdrawals may create penalties. Liquidity, investment risk, and the timing of distributions also need to be considered.

Depending on the type of plan, dividing retirement assets may also require a Qualified Domestic Relations Order (QDRO) or another specialized transfer procedure. Mistakes might create tax problems.

The parties should also consider how divorce might affect future retirement income. A settlement that looks equitable on paper may leave one spouse with insufficient income later, especially if that spouse has been out of the workforce for many years.

Health Insurance and Long-Term Care

Health insurance deserves early attention. A spouse who relied on the other spouse’s employer plan may need COBRA, a Marketplace plan, coverage through a new employer, or Medicare after becoming eligible. Premiums can be significant, and eligibility rules can change.

Later-in-life divorce also raises questions about long-term care, disability, life insurance, and beneficiary designations. Existing documents should be examined carefully to make sure they have the proper beneficiary designations.

As of this writing, 26 states automatically revoke the beneficiary designation of the former spouse on a life insurance policy upon divorce, so the policy owner would need to redesignate the former spouse as beneficiary post-divorce if the intention is to keep the former spouse as beneficiary.

Similar issues may arise with wills, revocable trusts, powers of attorney, retirement accounts, annuities, and other beneficiary-type designations.

Adult Children and Family Dynamics

Adult children may experience their parents’ divorce as a major loss even if they are no longer living at home. They may feel pressure to choose sides, manage communications, or provide financial or emotional support to a parent.

Parents should avoid using their children as messengers or involving them as unwilling participants. Parents should also distinguish between support they want to provide and support they can realistically afford after maintaining two households.

Financial decisions involving adult children should be addressed honestly. Continuing to pay tuition, help with housing, or cover other expenses may be possible, but those commitments should not be made without considering their effect on each parent’s housing, retirement, health-care, and ordinary living costs.

Support Obligations and Life and Disability Insurance

It is also important to consider whether a support obligation should be protected by life insurance. The analysis should address whether coverage is available, whether the amount is sufficient, and whether the cost is affordable. If life insurance is unavailable or too expensive, the parties should negotiate alternative protections.

Similar attention should be given to disability insurance for the support payor. Disability can interrupt the income used to make support payments, yet disability coverage is often overlooked in Divorce Settlement Agreements.

A disability may reduce or eliminate the payor’s ability to make alimony and other support payments. The recipient may then face a sudden income shortfall, particularly if the recipient kept the marital home based on the expected receipt of those payments. The parties should address this risk during settlement negotiations when cooperation is more likely to occur.

The agreement should also address practical issues such as proof of coverage, notice of cancellation or lapse, policy ownership, beneficiary designations, coverage reductions, and what happens if the required insurance becomes unavailable.

A More Realistic Definition of a Fair Settlement

In an amicable empty-nest divorce, fairness should ideally be measured by more than a 50-50 division of marital assets. A workable settlement should consider monthly cash flow, housing, taxes, retirement, health insurance, liquidity, and the cost of maintaining separate households.

Each spouse should understand what the settlement means five, ten, and twenty years from now. That will probably require financial projections years into the future rather than a simple balance sheet.

When I prepare financial projections, I generally assume that people may live to age 100. The appropriate assumption will depend on the facts, but the larger point is that a later-in-life settlement should be tested against a long future, not only the first year after divorce.

Conclusion

Empty-nest divorce can offer a chance to redesign the next stage of life, but the financial margin for error may be smaller than it was earlier in the marriage. The key issues are usually interconnected: housing affects cash flow, cash flow affects retirement, retirement income affects future lifestyle, and so on.

The goal is not just to divide what the couple currently owns. Ideally, it is to create two workable financial lives after a long marriage ends.

Frequently Asked Questions About Empty-Nest Divorce

What is an empty-nest divorce?

An empty-nest divorce is a divorce that occurs after a couple’s children have grown up and left home. With day-to-day parenting responsibilities reduced or ended, one or both spouses may begin reassessing the marriage and planning for the next stage of life. The divorce may still involve complex property, retirement, tax, insurance, and housing issues.

Can one spouse keep the marital home after an empty-nest divorce?

One spouse may be able to keep the marital home if that spouse can buy-out the other spouse’s share of the home’s equity, qualify to refinance the mortgage in that spouse’s own name, and afford the ongoing costs of ownership. Those costs include the mortgage, taxes, insurance, HOA fees, repairs, and ordinary day-to-day living expenses. Keeping the home may be emotionally important, but it should be tested against long-term income and retirement projections to see if it’s a viable solution.

What happens to life insurance and beneficiary designations after divorce?

The parties should review life-insurance policies, retirement plans, wills, trusts, powers of attorney, and other beneficiary designations after the divorce.

As of this writing, 26 states automatically revoke the beneficiary designation of the former spouse on a life insurance policy upon divorce, so the policy owner would need to redesignate the former spouse as beneficiary post-divorce if the intention is to keep the former spouse as beneficiary.

Should disability insurance be addressed in an empty-nest divorce?

Yes. If alimony or child-support payments depend on the payor’s earned income, a serious disability could reduce or interrupt those payments. The parties should consider whether disability insurance is available and affordable, how much coverage is needed, and what other protection may be available if insurance cannot be obtained.