Grey Divorce Advice for Alberta

“Grey Divorce” – a term we hear frequently in Alberta family law. It can go by many names: ‘diamond divorce’; ‘silver separations’, or even “silver or diamond splitters’. But whatever it’s called, separation and divorce later in life has significant financial and legal implications for both spouses, due to the long duration of the relationship and the spouses’ stage of life, particularly when dealing with a division of substantial assets (i.e., ‘high net worth’ couples) or a continued high income available to pay spousal support between the parties.

What is ‘Grey Divorce’?

So what is “Grey Divorce“, and why is it talked about so much? “Grey Divorce” is a term generally used to describe the increasing world-wide trend of couples over 50 who choose to end their long-term relationships (some of over 40 years) whether they are married or not. The rate of divorce for those over the age of 50 has doubled over the past 20 years. But “Grey Divorce” in Alberta may more specifically refer to ‘high net worth’ couples (those whose net family property exceeds $1M) and high-income couples (incomes over $250,000/year) who decide to separate and divorce after a long-term (i.e., 20+ year) or second (third?) relationship.

Why ‘Grey Divorce’?

But why is “Grey Divorce” so prevalent? Obviously, each couple will have their own individual reason(s) for wanting to end their personal relationship, but some of the main reasons older people may want to end their long-term relationship include:

• Differing views on retirement – after years of working, some want to retire and relax (travelling, reading, gardening, etc.); some want both spouses to keep on working;
• Financial Clashes – after years of accumulating assets, some want to enjoy the ‘fruits of their labour’; some want to save that wealth for a ‘rainy day’, or keep it for their children;
• Empty Nest Syndrome – once their children have left and only the couple remain in the family home, new or long-term differences between the couple may become more prominent and less tolerated;
• Changing Expectations – with longer life expectancies and significant accumulated wealth (and perhaps the influence of social media), many “Baby Boomers” are looking for greater happiness and fulfillment outside of a traditional lifestyle and relationship.

Legal Framework for Grey Divorce in Alberta

Under Alberta’s Family Property Act (FPA) and the federal Divorce Act, grey divorce cases must navigate complex property division and support obligations. The FPA governs the division of family property and debt acquired during the relationship, while spousal support is determined under federal guidelines and common law principles established in cases like Spousal Support Advisory Guidelines and Bracklow v. Bracklow.

Key Legislation:

• Family Property Act (Alberta)
• Divorce Act (Canada)
• Family Law Act (Alberta) for unmarried couples
• Matrimonial Property Act (for marriages before January 1, 2020)

Property Division in Alberta Grey Divorce Cases

Family Property vs. Exempt Property

Under Alberta’s Family Property Act, family property is divided equally between spouses, regardless of who holds title. However, exempt property remains with the original owner. This distinction becomes crucial in grey divorce cases involving:

• Pre-marital assets brought into the relationship
• Inheritances and gifts received during the marriage
• Business interests owned before the relationship
• Increase in value of exempt property during the relationship

Valuation Challenges

Grey divorce often involves complex asset valuation, including:

• Pension plans and RRSPs
• Business valuations and professional practices
• Real estate portfolios
• Investment accounts and securities
• Collectibles and art

Professional appraisals may be required for accurate valuations, particularly for businesses, real estate, and unique assets.

Spousal Support Considerations

Unique Aspects of Grey Divorce Spousal Support

Spousal support in grey divorce cases presents unique challenges:

• Longer duration of support due to limited ability to become self-sufficient
• Retirement planning impact on both payor and recipient
• Health considerations affecting earning capacity
• Career interruptions that may have lasting financial impact

Spousal Support Advisory Guidelines (SSAGs)

The SSAGs provide ranges for spousal support amounts and duration, but in grey divorce cases involving high-income earners (over $350,000 annually), courts have greater discretion and may deviate from the guidelines.

Indefinite Support

In relationships of 20+ years, spousal support is typically indefinite, meaning there’s no set end date. This is particularly relevant in grey divorce cases where the recipient spouse may have limited opportunity for retraining or career advancement.

Pension and Retirement Asset Division

Canada Pension Plan (CPP) Credit Splitting

Former spouses can divide CPP credits earned during their relationship through credit splitting. This must be applied for within 36 months of divorce or 48 months of separation.

Private Pension Plans

Defined benefit pensions are often the most valuable asset in grey divorce cases. Alberta courts can order:

• Immediate division of pension value
• Deferred division where benefits are shared when received
• Offset arrangements against other family property

RRSPs and RRIFs

Tax implications must be carefully considered when dividing retirement savings:

• Direct transfers between spouses avoid immediate tax consequences
• Timing of withdrawals can significantly impact tax liability
• RRIF minimum withdrawal requirements for those over 71

Child Support in Blended Families

While many grey divorce cases involve adult children, some may include:

• Minor children from second marriages
• Adult children with disabilities requiring ongoing support
• Step-children and complex support obligations

Under the Federal Child Support Guidelines, obligations continue regardless of the parents’ age or retirement status, though retirement may constitute a material change in circumstances warranting support modification.

Tax Implications of Grey Divorce

Principal Residence Exemption

When dividing the matrimonial home, spouses must consider:

• Capital gains implications if the home is sold
• Principal residence exemption can only be claimed by one spouse
• Attribution rules for transferred property

Income Splitting and Pension Income

Pension income splitting opportunities may be lost post-divorce, potentially increasing overall tax burden for both spouses.

RRSP Contribution Room

Spousal RRSP contributions end upon separation, affecting retirement planning strategies.

Estate Planning Considerations

Will Updates

Divorce automatically revokes gifts to former spouses in wills, but common-law separation does not. It’s crucial to:

• Update beneficiary designations on insurance and retirement accounts
• Revise powers of attorney and personal directives
• Consider new estate planning strategies post-divorce

Life Insurance

Courts may order continued life insurance coverage to secure spousal support obligations, particularly important in grey divorce where the payor spouse’s earning years may be limited.

Alternative Dispute Resolution for Grey Divorce

Collaborative Divorce

Collaborative family law offers particular advantages for grey divorce:

• Privacy and confidentiality
• Control over timing and process
• Integration of financial and mental health professionals
• Preservation of family relationships for grandchildren

Mediation and Arbitration Benefits

Family Law Mediation and Mediation-Arbitration are often preferable to court proceedings for grey divorce because:

• Faster resolution preserves retirement timeline
• Lower costs protect retirement assets
• Privacy protects business and professional reputations
• Flexibility allows creative solutions

Special Considerations for High Net Worth Grey Divorce

Business Valuation and Division

Professional practices and businesses require special attention:

• Goodwill valuation and whether it’s family property
• Buy-out arrangements and financing options
• Ongoing business operations during divorce proceedings

International Assets

Grey divorce cases may involve international property and investments, requiring consideration of:

• Foreign tax implications
• Currency fluctuations
• Enforcement of Canadian orders abroad

Financial Planning Post-Grey Divorce

Retirement Income Restructuring

Post-divorce financial planning must address:

• Reduced household income and increased expenses
• New retirement timeline and savings requirements
• Investment strategy changes for single-person households
• Long-term care planning without spousal support

Government Benefits Impact

Divorce may affect eligibility for:

• Old Age Security (OAS) clawback thresholds
• Guaranteed Income Supplement (GIS)
• Provincial health care premiums

Protecting Your Interests in Grey Divorce

Early Legal Advice

Seeking legal counsel early is crucial because:

• Limitation periods may apply to certain claims
• Financial disclosure obligations require careful preparation
• Interim support may be necessary during proceedings

Financial Documentation

Comprehensive financial disclosure should include:

• Three years of tax returns
• Pension statements and valuations
• Business financial statements
• Investment account statements
• Property appraisals

Professional Team Assembly

Grey divorce cases often require a multidisciplinary approach:

• Family law lawyers for legal representation
• Accountants for tax and business valuation advice
• Financial planners for post-divorce planning
• Mental health professionals for emotional support

Moving Forward: Life After Grey Divorce

Separation and divorce is difficult, no matter what stage of life it arises. Is it more difficult if it arises later in life, after having built a relationship, raising children, developing careers and accumulating property? Maybe not – it’s always difficult, for everyone (including children). But the process for resolving issues arising out of that long-term relationship doesn’t have to be difficult.

With proper legal guidance, financial planning, and the right dispute resolution approach, grey divorce can be managed in a way that protects both spouses’ interests and allows them to move forward with dignity and financial security.

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References:

1. Family Property Act, RSA 2003, c F-4.5
2. Divorce Act, RSC 1985, c 3 (2nd Supp)
3. Family Law Act, SA 2003, c F-4.5
4. Spousal Support Advisory Guidelines, Department of Justice Canada
5. Statistics Canada, Divorce Database
6. Bracklow v. Bracklow, [1999] 1 SCR 420

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