When couples over the age of 50 decide to divorce, property division is one of the many things that the couple will have to deal with. Over the course of time, individuals often acquire more assets and as a result have a lot at stake. What’s at stake can include homes, vehicles, retirement and investment funds and other lucrative assets.
Deciding who gets what during divorce proceedings can be difficult as emotions are already running high. And with things like retirement funds and home ownership, it can get complicated.
Taxes and Retirement Funds
When considering how to divide retirement funds, people often forget that these funds are taxed on withdrawal. So even if it looks good on paper, the amount may actually be much lower.
But these types of assets are sometimes more valuable than other assets, such as a home. Those who have spent years building these funds may think that they are worth a certain amount. The key is to understand the true value of the fund since a retirement account that appears to be worth $100,000 on paper may only net $65,000 when withdrawn.
Social Security Benefits
Another asset that couples often underestimate during divorce proceedings is Social Security benefits. You’ll be entitled to the Social Security benefits of your spouse when you turn 62, so long as your marriage lasted more than 10 years and you haven’t remarried. In addition, if your ex-wife or ex-husband has a legal claim to your Social Security benefits, that should be considered when establishing other terms, such as alimony payments.
Custody battles are rare for divorcing parents over 50 since children are normally independent and fully grown. However, it’s still a good idea to create a plan that ensures your assets end up with your children instead of with your former spouse’s new significant other, for example.
Source: Smart Money online, “Divorce Over 50: 3 Mistakes to Avoid,” Catey Hill, 23 March 2011