Any couple that decides to divorce will have financial considerations to take into account, but issues surrounding divorce finances may affect those couples who divorce later in life the most. Ending a marriage after the age of 50 can have its own set of issues to address when it comes to preserving financial security. Often, couples of that age have investments, savings, accumulated assets, and retirement accounts to sort through.
Questions to Ask
Many older couples in this situation may need to take actions that they would not have had to if they remained married, such as going back to work or selling their home. However, there are steps these individuals can take to minimize the the financial effect their divorce will have. According to a financial advice article
recently published, there are certain questions divorcees can ask before, during, and after a divorce proceeding to ensure financial security.
- Where is the money? Those who are getting divorced need to identify and determine what marital property will be eligible for division. This generally includes money earned during the marriage and assets or items purchased with that money. Items that many may not realize are marital property include pension plans, retirement accounts, life insurance policies, and tax returns.
- What are the tax consequences? Any future tax bills must be factored into all settlement offers. An offer that seems fair on its face may not be so equitable when taxes are considered. Tax consequences must especially be considered when it comes to alimony payments, which are usually considered taxable income to the recipient and a tax deduction for the payor.
- How can we split our retirement savings? Depending on the type of retirement account, transfers can either be straightforward or complex. IRAs can usually be handled by the divorcing spouses and addressed within the divorce decree, while splitting 401(k)s and pension plans can be more complicated. Early and well-informed action in this area can provide huge financial benefits.
- Should I keep the house? While many people who divorce later in life feel strongly about keeping their home, it may not be a wise financial move, especially if they forgo other assets in the negotiating process to do so. Sometimes, it is more beneficial and financially wise to sell the home and split the profits.
- Will I still be insured? In the past, many couples may have actually avoided divorce for fear of being denied individual health coverage. Now, new laws like the Affordable Care Act should help to relieve some of those concerns, as well as marketplace or COBRA coverage under an ex-spouse’s employer health plan.
- How should my estate plan change? Couples divorcing later in life are advised to change all of their estate planning documents as soon as they make the decision to divorce, in order to best improve their chances of protecting their property and preserving their final wishes.
If you are considering divorce, the experienced attorneys at the Davi Law Group, LLC can help you. Please feel free to contact us
today for a consultation. Our offices are located in Wheaton, Warrenville, and Chicago.