Financial Divorce Solutions
What is Gray Divorce?
Divorce rates in the U. S. continue to fall among all age groups except for one: those over 50 years old. The rise of so-called “gray divorce” presents a distinct set of issues apart from those divorcing at younger ages.
Why Divorce Now?
Americans view marriage very differently than they have in past generations. For several hundred years, marriage was viewed as an institution where the economic interests of two families were united. As time progressed, marriage became an opportunity for each partner to realize his or her partner’s idealized version of a husband or wife. Now, individuals look to marriage to see how it can fulfill the dreams and goals conceived before marriage. This view of marriage has led to a decline in divorce rates mostly because younger folk are waiting to get married until they have achieved many of their own personal goals.
However, many boomers got married when companionship was the goal of marriage, and they’re finding themselves having dreams, opportunities, and lives to lead that have outgrown their initial conception of marriage. As children grow and leave, relationships that were held together by the presence of children began to seem less viable, and divorce becomes an option. Furthermore, women are finding themselves more financially stable, and wives are seeking divorce as a means of finding more fulfillment.
Complications of Gray Divorce
Although child custody and support are unlikely to be an issue in most divorces involving those over the age of 50, that is not to say that gray divorce is without complications. Those divorcing near retirement age quickly discover that separating finances at such a pivotal time can be quite complex.
Sources of retirement income are governed by different rules and jurisdictions. IRAs are subject to state laws, while 401(k)s fall under federal laws. Pensions are governed by employer rules, and often their division is determined based on the facts of each specific case.
In order to split 401(k)s, a qualified domestic relations order (QRDO) must be issued by a judge and given to the administrator in charge of the retirement plan. Hiring an attorney who is well versed in the language used in QRDOs and who is familiar in the intricacies of dividing retirement plans is key if you want to avoid costly mistakes.
Finally, for those divorcing near retirement age, there are a few issues that may not be readily apparent upon a cursory look at the couple’s financial picture. For one thing, a spouse who has been the primary caretaker of children and who hasn’t worked during much of the marriage, will need to account for being removed from her spouse’s health insurance. When the divorce is finalized, the spouse will need to acquire new insurance policies for life, property, and disability, and those new policies will come at a higher rate due to being purchased at a more advanced age. These financial realities need to be confronted when agreeing upon the division of assets.
These issues particular to those facing divorce over 50 highlight the need for an expert experienced in gray divorce.
If you are a business owner or are divorcing a business owner there are many special considerations for how to handle the business and income. We help you find the best possible solution for your divorce.