The financial stakes for younger couples who divorce are much lower than older couples who divorce simply because younger couples have more time to correct any financial mistakes or obstacles they encounter during the property division of their divorce. The greater stakes however have not persuaded baby-boomers against their decision to divorce. Even though the divorce rate over the last twenty years has decreased slightly, divorces among those over 50 have doubled.
Once people are in their 50s and beyond, it becomes more difficult to recover from mistakes since people in their 50s and beyond normally own real estate, have multiple retirement accounts, life insurance and a long work history. Since there can be so much to lose it is essential that older individuals who divorce get the most fair settlement they deserve according to the president and founder of Bedrock Divorce Advisors in New York. The expert says that older individuals who divorce should look at three things: taxes on retirement funds, the value of social security and children.
Retirement accounts like 401(k)s and other savings accounts are among the most significant asset an older couple may have. Therefore understanding the true value of these accounts is all the more important. Older individuals who divorce should consider the impact that taxes have on the value of these accounts because some will be taxed upon withdrawal.
Often social security can be overlooked in divorce negotiations. If a couple was married for at least 10 years, one spouse may be entitled to receive the Social Security retirement benefits of the other spouse at age 62. The possible benefit should be included in settlement calculations.
Finally, older parents who divorce should consider setting up trusts like a “lifetime asset protection trust” that will safeguard the assets intended for children. Such trusts can prevent an adult child’s ex-wife or an ex’s future spouse from claiming money or assets.
Source: The Wall Street Journal, “Divorce over 50: Mistakes to avoid,” Catey Hill, 3/23/11