Known in some circles as “gray divorces,” when couples nearing retirement age pull the plug on their marriages, splitting up the assets can be quite complex — namely, divvying up the spouses’ retirement accounts.
In the 14-year from 1990 to 2014, one study by the National Center for Family & Marriage Research found that divorce rates for baby boomers over 50 doubled. Perhaps even more surprising, during about the same time, the rates for couples older than 65 tripled.
The president of the American Academy of Matrimonial Lawyers commented, “It’s very unsettling, if not downright scary, for people who are older without much earning capacity left to face a divorce as they are looking forward to retiring.”
That’s why pensions and retirement accounts are second only to spousal support when it comes to assets over which older divorcing couples go to battle. Learn how to make the most of the retirement assets that are available to you in your later-in-life divorce.
The law views a marriage as an economic partnership, meaning those accounts are marital property. Under most circumstances, retirement benefits that were acquired during a couple’s marriage must be split evenly, one specialist in North Carolina family law stated. “The couple as a unit has retirement savings they intended to use in one household, and now those retirement funds need to service two households.”
It’s also important to consider the tax ramifications of retirement accounts, which may involve consultations with financial advisors. Retirement accounts should ideally be split according to their after-tax value.
It can be tempting to trade your interest in a retirement account for a share in real estate, such as the family home. Resist the temptation. Consider the expenses involved with the upkeep and maintenance of a home, especially as you will now be solely responsible for repairs, taxes, etc. If you want to preserve memories of the home where the children grew up, take lots of pictures, but don’t barter your future away on a sentimental whim.
Work closely with your North Carolina divorce attorney to make sure that all of your bases are covered and no assets are omitted or left on the bargaining table.
Source: CNBC, “Memo to divorcing boomers: Watch your assets,” Jessica Dickler, Sep. 09, 2016