Special Concerns In A Gray Divorce
Mississippi couples that end marriages in their 50s should be aware of how to split assets with care.
Gray divorce is a term that has evolved in our society to refer to any divorce involving spouses at later stages in life, generally at age 50 or beyond. A CNBC.com article notes that according to the National Center for Family and Marriage at Bowling Green State University, one-fourth of all after-50 American divorces today fall into this category. No doubt, many Mississippi divorces are included in this.
People at this point in life are less likely to have very young children at home making child support, child custody and parenting plans less of an issue in their divorces. However, with retirement looming near, the issue of asset division takes on increased importance. A financial loss due to a divorce can impact anyone but when there are fewer years left to work to recoup those losses, the concerns can increase.
Be Wary Of Keeping The Home
NextAvenue.com highlights the common scenario in which a wife strongly wishes to keep a home after a divorce. It has been her stability and represents that for her going forward, especially if children are still at home or likely to come back from college for breaks and visits.
However, the ultimate costs associated with maintaining a home, even one that is fully paid off, often far outweigh the immediate gain to be had by keeping this asset. As pointed out by the Huffington Post, spouses should make a detailed breakdown of all items related to this. Taxes, insurance, repairs, maintenance and even capital gains taxes can all add up to a high price to pay.
What Should Be Done With The Retirement Accounts?
It may seem logical that someone getting divorced near retirement age may rush to split retirement accounts with a soon-to-be former spouse. However, it is worth assessing all items in a marital estate before making this decision. Because many retirement accounts are funded with pre-tax dollars, Mississippi spouses will need to prepare to pay taxes on any future distributions. Roth IRAs, for example, that are funded with post-tax dollars, may be a smarter asset to keep or obtain in a divorce.
If it is appropriate to split a retirement fund, the use of a Qualified Domestic Relations Order is imperative. Without this, couples face the prospect of paying high taxes and even early withdrawal penalties on their retirement savings. This is because in the process of splitting such an account, money is distributed from it. This distribution needs to be clearly identified as part of a divorce settlement in order to avoid the taxation.
If you will be getting divorced at any age in Mississippi, you should consult with an attorney at the outset of the process. Making sure you have the right guidance when making important financial decisions is a must.
Keywords: divorce, retirement, assets, property.