In grey divorce, resolution processes more vital than ever

COVID-19 has bolstered case for mediation and arbitration among older couples in divorce, says family law expert

In grey divorce, resolution processes more vital than ever

Yesterday, the world was left in shock at the news that Bill and Melinda Gates, a billionaire power couple who seemed so aligned and in sync in the public eye, have decided to part ways.

On Twitter, the Microsoft co-founder said they had put “a great deal of thought and a lot of hard work on their relationship,” but after spending 27 years raising three children and building a world-shaping foundation – one whose mission they still believe in and will continue to work on together – the two no longer believe they can grow together as a couple.

It just goes to show how all over the world and in Canada, the traditional idea of “till death do us part” has given way to a more nuanced picture of love – one that leaves room for the idea that divorce, long held as a taboo, can open up the possibility of a wonderful second life.

“What we’re finding is that there tends to be less stigma with divorces,” said Diana Isaac, a partner with Shulman and Partners LLP. Since she was called to the Ontario Bar in 2010, Isaac has appeared before all levels of the Ontario courts on complex matters of family law.

“When people do grow apart, they're open to this idea of separation and divorce because they're wanting to be happy in their lives,” Isaac told Wealth Professional. “As people live longer and they’re children become independent, they’re more likely to say ‘I’m not willing to make a concession if I’m unhappy; I want to live this life to the fullest.’ Each parent is more likely to focus on themselves.”

Couples that disengage in their golden years are also embracing the idea of moving on to another happily ever after. In her own practice, Isaac says she’s seeing quite a few marriage contracts – Canada’s equivalent of prenuptial agreements from the U.S. – and cohabitation agreements. Those moves, she said, tend to happen among common-law couples who had just come out of a divorce and want to protect their assets for retirement or for their children from the first family.

Aside from those secular trends of soul-searching and fulfilment-seeking, the arrival of the global pandemic has reshaped the landscape of grey divorce in Canada. Aside from anecdotal evidence pointing to increased rates of separation, there’s been a wholesale shift in the way divorce proceeds through the legal system.

“Before, you’d need to physically go to a courthouse, which could be challenging for people to get to,” Isaac said. “Now most of the court appearances are being conducted virtually, which has allowed us to reach people who are in different parts of Ontario. It’s also reduced the potential difficulty of traveling and staying at the courthouse all day, as opposed to just logging in and out.”

But that convenience can only go so far, and not just because of connectivity issues. As Isaac tells it, there’s a growing backlog of family law cases that require court intervention. A prime example would be cases where one party seeks to force the sale of a matrimonial home, which could be part of a downsizing decision; in a volatile housing market, a prolonged delay could potentially lead to tens of thousands of dollars in lost opportunity.

Another example involves spousal support, or what’s called alimony in the U.S. Disagreements on whether one party should provide financial support to the other are taking more time to resolve in court, leading to an added emotional and financial toll for couples, particularly on the party who’s counting on the support.

“Especially when separating clients need finality or have to deal with an issue that’s quite imminent, we tend to different avenues of resolution. These are what we call family dispute resolution processes, and the prime example is mediation or arbitration,” Isaac said. “Because of the backlog in the courts, it’s incumbent on lawyers to speak with their clients and figure out a remedy to let people move on.”

The need to move on can be very acute, particularly in high-conflict cases where both parties are living under the same roof. Navigating through finances can also be a particularly delicate process for would-be grey divorcees, she noted, as they try to sort through the thorny question of how to split their nest egg and other assets. That entails conversations about each person’s desires, lifestyle, and plans for retirement, and how those could potentially change.

Sometimes, those discussions happen on uneven ground. In certain cases, one spouse is in the dark with respect to their net worth, income, or spending because the other was in charge of their finances. For separating couples either at the edge or over the threshold of retirement, sorting through the financials and providing necessary disclosures – a process that can require much hand-holding and follow-up from legal professionals – comes with especially high stakes.

“In Ontario, the Family Law Act includes a concept of equalization of net family property,” Isaac said. “The philosophy behind it is to divide the net worth of what has accrued during the course of the marriage. In practice, that involves determining their net worth, accounting for the growth in wealth between the date of marriage and the date of separation, and dividing that in half, though there are exceptions.”

Given the various complications that come in the course of the resolution process, Isaac advises grey divorcees to work with a lawyer who can assist in reaching a final resolution that’s not just in their best interest, but also has a lasting financial impact. Concurrently, she also strongly advises people to have a financial advisor on hand to help them with constructing a financial picture that takes their new reality into account.

“There's only so much money in that spousal pot, and you need to get some perspective on what that looks like when you're retired or if you're retiring,” Isaac said. “You need a financial advisor to help you make sense of the lifestyle you're looking for, how you can best invest what you have left, and how you can maximize that capital or income to get a lifestyle that doesn’t depart too much from what you’ve been accustomed to.”

The process can be made all the smoother, she added, when parties are aware of their finances and organized with their disclosure. She appreciates that certain dynamics can develop over the years, with can lead to one party being more aware than the other. But when both have a decent grasp of their accounts – which includes being fastidious with records of their balances, inflows, and outflows – it can help move matters along effectively in many cases.

And along the same vein of reducing friction, Isaac encourages the use of mediation and arbitration to settle cases, particularly for retirees and near-retirees. Because those processes are more expeditious, they tend to be resolved more quickly and cost-effectively – an important consideration when every dollar and day counts.

“These people need to figure out their financial future. They only have so much income and wealth to rely on, and only so much time to recover from potential losses,” she said. “If you can do it quicker and more cost effectively, why not?”


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