Divorce after the kids leave the nest comes with its own unique challenges

April 17, 2013

Divorce after the kids leave the nest comes with its own unique challenges

Article provided by Law Office of Dawn R. Underhill
Visit us at http://www.dawnunderhill.com/

Two decades ago, divorce was uncommon for those over the age of 50. However, according to the National Center for Family and Marriage Research at Bowling Green State University that has changed. In a recent study, they found that one in four people seeking a divorce today is in this age category.

Reasons are numerous. More couples now reevaluate their relationships after their children leave the home. Many baby boomers have divorced and remarried in the past. Divorce rates are two and a half times higher for those over the age of 50 in remarriages, according to the same researchers.

For many couples divorcing later in life their equity is in assets that are not liquid, such as a family home and retirement/investment accounts. Property division decisions in a high-net worth divorce are all the more important, because there is less time to make up financial losses before retirement. Keeping a steady stream of income becomes a key consideration.
Equity in the home

With the collapse in housing prices, one of the first issues is to figure out how much your home is worth. An independent appraiser or a real estate agent can assist with this step.

The next consideration relates to whether you have sufficient monthly cash flow to keep the home. If there is no mortgage this is not as serious a concern, but there are still property taxes. Depending on age, a reverse mortgage on the home is one potential income stream. Renting part of the property is another.

Some individuals fight to keep a home for sentimental reasons and learn that they cannot afford to maintain it on their own. If it does not make sense financially for either spouse to keep the home, a sale and division of the equity may be a route for each spouse to downsize.
Retirement accounts

When considering a divorce, it is important to gather recent statements for all retirement accounts and Social Security. For example, depending on the length of the marriage substantial Social Security retirement and survivor benefits may be available.

With traditional employer provided retirement accounts, one spouse may decide to buy out the non-participant spouse. In the alternative, an arrangement may be crafted where the non-participant spouse receives a share of the benefits when his or her ex-spouse retires.

The assets in other investment and retirement vehicles are often best split by percentages rather than dividing who takes shares in company A or B to avoid lopsided gains and losses. Any withdrawals from retirement accounts should be considered carefully, because they may come with early withdrawal penalties and high tax rates.

When a relationship breaks down and divorce becomes the only way forward, contact an experienced family law attorney. Consulting an attorney is one way to avoid costly mistakes down the road.