According to the National Center for Family & Marriage Research, the divorce rate for those over the age of 50 has doubled over the past two decades. The expert explanation for this is simple: by the time people hit their fifties, they’ve been married at least once or twice. Some may be on their third marriage. These marriages are less likely to last, and so their divorce rate reflects this.
Whether you’re on your first or second divorce, there is a lot more to consider and much more at stake if you’re over 50. Why?
By the time you enter into your 50s and beyond, one or more of the following factors may contribute to the terms of your divorce settlement:
- Some real estate
- Retirement accounts
- Life insurance policies
- Either a long work history, or a short one if you’ve been relying on your husband’s income
- And more…
If you don’t play your cards right, you will have far less time to recover from a botched divorce settlement.
Mistake #1: Forgetting Retirement Taxes
For those over 50, any 401(k) account or other pre-tax retirement accounts may be your most significant asset, worth the same or more than your own family home. Either way, knowing the true value of your retirement portfolio is crucial.
But the value of the account might really be worth as little as 65 percent of the statement balance because of taxes due when you withdraw. This kind of miscalculation can be painful in a community property state like California, where divorcing couples often split assets evenly. What may look equitable on paper could amount to a raw deal. Negotiating for a larger portion of shared savings and retirement may be necessary for a fair split.
Mistake #2: Forgetting Your Income Options
Whether you or your husband are still employed or already retired, having a monthly income may be more important than the division of your assets. To settle discrepancies in a couple’s income, alimony may be awarded to whoever earns less or has been out of the workforce for any amount of time. However, relying on monthly alimony payments from your husband could be risky with each year that passes after the age of 50. It may sound harsh, but the chance that your ex-husband may die increases with age.
As for a possible life insurance payout when your ex-husband dies, policy beneficiaries can be changed before and after a divorce. Having and owning your own life insurance policy covering your ex-husband, to be paid out to you and only you, could instead be a part of your divorce terms. Still, a life insurance policy payout in no way will provide you a reliable income right now.
Social Security Payments
A possibly reliable income source may be Social Security. If you’ve been married for at least 10 years, you may be entitled to your husband’s Social Security benefits at age 62—as long as you remain unmarried. Whichever spouse earns less will want to claim the higher-earning spouses' benefits, which will be worth more. If your husband has a claim to your benefits, you’ll need to remember to figure that amount into negotiations for alimony or other payments.
Mistake #3: Forgetting Your Children When Dividing Assets
Older couples have older children: teenagers, college students, and even fully grown, independent adults. Custody issues may not be as intense as when smaller children are part of the equation, but that doesn't mean there won’t be conflicts. To prevent discord down the road, you may need to make a plan to ensure any assets to be passed along to your children are set up appropriately. If you don’t take the proper precautions as part of your divorce settlement, your ex's future spouse or his new wife could get the money.
If you have younger children, it’s important to designate both a guardian for any child under age 18 and someone else as a guardian of his money. In reality, both you and your husband will control some money, but both money and children can be manipulated in a messy divorce. Splitting those responsibilities and obligations can create a kind of system of checks and balances.
For those who are older, making any mistakes could lead you to a lower-than-deserved settlement. If you have questions about your divorce or need help, contact the Law Offices of Paul H. Nathan. We represent only women because we know you aren’t always treated fairly in divorce cases. We will do what we can to protect you and get you the settlement you deserve.
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