People over the age of 50 are getting divorced at double the rate they did in 1990. What gives? It seems empty nesters, who no longer feel the need to stay together for the sake of the family, are finding it easier to part ways these days, what with the stronger financial standing many women have these days. But the impact of gray divorce is still hefty because marital property ultimately must be divided up.
What is Marital Property?
Anything that has been purchased, acquired, or earned during the years you were married—excluding gifts given to one spouse exclusively, is considered marital property. So even if one party had a retirement account listed in only their name, if contributions or earnings were made during the marriage, they will have to be split.
What Happens to Retirement Accounts?
The laws on IRA’s and 401(k)’s says that they must have a single account holder, but in technical terms, the money belongs to both parties when married. So one spouse may need to transfer money into another account as part of a divorce settlement.
- IRA’s: Rolling over funds from one IRA to another is allowed only if the divorce decree calls for it and it is filed with the custodian.
- 401(k)’s: A qualified domestic relations order (QDRO) must be filed with the court to indicate the money division. A rollover within 60 days is the best option tax-wise, although the spouse who is receiving funds can use some funds for immediate funds without the 10 percent penalty that applies for those under 59 ½ years old, although they’ll still pay state and federal taxes.
Can You Keep Your Pension?
Generally speaking, a pension is another shared asset that is to be considered among those divided between parties in a divorce.
For couples who were married for 10+ years, the lesser earning spouse qualifies for as much as 50 percent of the higher earner’s retirement-age Social Security benefit, with no penalty to the higher earner.
Did one of you come into a significant inheritance? If the money was kept in an individual account, it may wind up sticking with that person following divorce. If, however, the money was put into a joint account, it’s possible a judge could rule that it’s marital property and in the mix of assets to be divided.
Taking Care of Your Gray Divorce
The experienced Springfield family attorneys at Courtney & Mills understand the special concerns associated with gray divorce, and will take care of the issues that matter to you most. To discuss, schedule a confidential consultation in our office today.