No matter what TV, movies and gossip magazines might seem to show, divorce is not just for the young. An increasing number of older couples are making the decision to untie the knot and go their separate ways. The decreased stigma surrounding divorce might have even encouraged some couples to finally divorce after years of knowing that their marriage was never the right move in the first place. While this new-found confidence to pursue what is in their best interests is no doubt a good thing, there are certain considerations that older couples in California need to pay attention to during property division.
Gray divorce refers to couples aged 50 and older who are calling it quits on their broken marriage. The phenomenon has been on the rise for years, with the biggest increase felt by those older than 65, whose divorce rate tripled from 1990 to 2012. Slightly younger couples were not immune from the increase either, with rates for couples between the ages of 55 and 64 doubling in that same time period.
Although it is likely that there will be more marital assets to divide if the couple was married for a significant number of years, property and asset division must be addressed just like in any other divorce. However, dividing up retirement funds is an added worry that many younger counterparts tend to not be quite as concerned about. Divorce at a later age does not allow for the same period of time to recover retirement savings, and how a retirement account is divided can have a huge impact on a person’s quality of life.
Despite myths about retirement savings being a personal asset if only one spouse’s name is listed on the account, retirement funds are considered a marital asset unless a premarital agreement explicitly states otherwise. During property division, the amount of savings in a given retirement account is divided between both parties, with each awarded a certain amount that they may receive at retirement — or they may withdraw the entire sum with a penalty. Any money deposited into the retirement fund after this division is for the sole use of that person. The process is straightforward enough, but California couples pursuing a gray divorce should be sure to give special care and attention to their retirement savings in order to secure a financially stable future.
Source: Forbes, “Easing The Financial Impact Of Divorce In Retirement“, Juliette Fairley