While divorce proceedings can have a positive effect on a person’s social life and overall level of happiness, couples who choose to separate near retirement age should consider the substantial effect that a divorce can have on each individual’s finances.
Aside from legal fees, couples will need to carefully allocate their retirement assets in a way that allows them to live comfortably once they leave the work force. Generally, even though retirement accounts are in one spouse’s name, the value of the accounts is considered community property. The Wall Street Journal warns that dividing retirement savings can be the most complicated task during the settlement process.
Many couples have a family home to think about during property division. This aspect is complex these days because of the market. The value of homes has dropped considerably in the past few years, and it can be hard to sell a home. Therefore, couples who wish to sell their marital home and split the proceeds may need to sell the home at a loss or wait for the market to improve.
Another important financial matter for long-married couples to work out is how to handle the ownership of a family-owned business. Keep in mind, family-owned often means the company is owned by one spouse. In a divorce, however, that doesn’t often matter. To divide property equally, the business sometimes must be sacrificed. Sources suggest that the ideal way to avoid a divorce dispute regarding the division of a business is for a couple to create a marital contract once the business is going, laying out what would happen should the marriage end in divorce.
Undoubtedly, financial matters of divorce can get complex; therefore, it is important to have an attorney who is experienced in the various complexities. This is especially crucial for those who are divorcing later in life, as securing financial security for retirement is of the highest priority.
The Wall Street Journal: “The ‘Splitting’ Headaches of Late-Life Divorce,” Kelly Greene, Aug. 6, 2011