Start with the trend, because the received version of it is out of date. The rate of gray divorce doubled between 1990 and 2010, at a time when the overall divorce rate was modestly declining, and that period is where the phrase and most of the commentary come from. The National Center for Family and Marriage Research reports that "more recently, the gray divorce rate has largely stagnated, and even declined slightly for adults aged 50-64, signaling that gray divorce is largely a Baby Boomer phenomenon." A growing share of all divorces nonetheless involves people 50 and older, because the married population itself is aging and because of the earlier acceleration. So the honest statement is that gray divorce became common and has stopped becoming more common, not that it is rising.
Health coverage between the decree and Medicare. This is the exposure that most often surprises a non-employee spouse. Divorce is a qualifying event under ERISA section 603, at 29 U.S.C. 1163(3), and the maximum continuation period for a qualifying event other than a termination, a reduction in hours or an employer bankruptcy is 36 months, at 29 U.S.C. 1162(2)(A)(iv). Three conditions bound that in practice. First, COBRA does not apply to a plan of an employer that "normally employed fewer than 20 employees on a typical business day during the preceding calendar year." Second, the plan may charge up to 102 percent of the applicable premium, so continuation coverage costs the full group rate plus an administrative margin, not the employee's old payroll deduction. Third, and most easily lost, the divorce is one of the two qualifying events the employee or qualified beneficiary has to report: 29 U.S.C. 1166(a)(3) makes the covered employee or qualified beneficiary "responsible for notifying the administrator of the occurrence" of a divorce within 60 days. Nobody at the employer does it for them. Medicare hospital insurance is available at 65 to individuals who are eligible for Social Security retirement benefits, so a spouse who loses coverage at 57 faces 36 months of COBRA and then several more years to bridge with individual coverage. Doing that arithmetic before signing is the difference between a known cost and a discovery.
The retirement accounts, and why an equal split can be an unequal split. A workplace plan is divided by a qualified domestic relations order, which is a court order the plan itself must approve, and the order is also the only instrument that can preserve survivor rights: under 29 U.S.C. 1056(d)(3)(F), to the extent a QDRO provides, "the former spouse of a participant shall be treated as a surviving spouse of such participant" for the survivor-annuity rules. A pension already in pay status is the hardest case in a gray divorce, because the election that fixed the survivor annuity was made at the annuity starting date and a decree does not undo it; whether anything can be done depends on the plan's terms and the order, and it is a question for the plan administrator and counsel rather than something to assume. On the tax side, IRC 1041 provides that no gain or loss is recognized on a transfer of property between spouses or, if incident to the divorce, former spouses, and that the transferee takes the transferor's adjusted basis. A transfer is incident to the divorce if it occurs within one year after the marriage ends or is related to the cessation of the marriage. The carryover basis is the part that matters at a settlement table: two accounts of equal stated value are not equal if one carries deferred tax and the other carries a low basis, and the difference is not visible on the settlement schedule.
Social Security is the one asset a court cannot divide, and it is often the most valuable one. Benefits on a former spouse's record are a matter of federal law rather than negotiation, they turn on the length of the marriage and the claimant's current marital status, and claiming them takes nothing from the former spouse. A marriage that is close to the statutory duration is one of the few places where the timing of a decree has a durable financial consequence.
The housing decision is a cash-flow decision disguised as an asset decision. A settlement records the home's equity. What it does not record is that the mortgage, taxes, insurance and maintenance now have to be carried by one income, often an income with fewer years left in it, and that a later sale may produce a taxable gain measured against a basis established decades earlier.
The document sweep after the decree. Beneficiary designations control the accounts they sit on regardless of what a judgment says, and the effect of a divorce on an existing designation differs by asset type and by state, so the reliable answer is to re-execute rather than to rely on a rule. The same sweep covers wills, revocable trusts, financial powers of attorney and health-care directives, all of which commonly name the former spouse.
