According to statistics, the rate of divorce among older Americans has more than doubled in the last 20 years. Even though these proceedings seldom involve disputes over child custody, visitation and child support, there can be other factors that make elder divorce proceedings complicated and time-consuming, such as the increased size of the marital estates and the allocation of retirement assets.
It’s Mostly in the Details
A primary concern in elder divorce cases involves the marital home. There may be substantial equity in the property, money that may be a key component of your retirement planning. When you divorce, one option may be to sell the home and split the proceeds. There are, however, potentially adverse tax consequences to this approach. Take the time to discuss the matter with your tax adviser and your lawyer before you do anything.
Whether you have already retired and have substantial retirement plan assets and are at or near the end of your working life, you need to be extremely careful how you divide retirement or pension plan assets. If you have an IRA, you can usually split the value and transfer a portion of the funds over into a new IRA without any adverse tax consequences. However, if you have a 401(k), 403(b), or other qualified plan, you’ll want a Qualified Domestic Relations Order (QDRO) or you will likely have a tax consequence on the transfer.
It’s also important to review your life insurance coverage as part of a late-in-life divorce. If you own the policy, you will need to designate a new beneficiary.