DIVORCE FOR SENIORS – What is different about “gray” divorce?
When younger couples divorce, it is likely that there can be child custody and support issues. There often is less in the way of assets to divide. Often, it is the division of debt.
For the grey divorce, it comes after years of working and accumulating, together. There are special considerations.
Division of Assets. While each of you will be entitled to fifty percent of the total of your marital estate, not all assets are created equal. If you are not dividing each individual asset, but are instead dividing the value of the overall marital estate, it is important to keep tax considerations in mind.
A portfolio of stocks can have long term capital gain issues. Were the stocks purchased at a substantially lower price? The individual who takes this stock will take the purchase price basis. When he or she sells, the capital gains will be due.
Retirement funds. First, there are specialized orders that must be entered by the court in addition to the Final Order of Divorce. These are called QDRO’s and EDRO’s. This specialized order can divide an IRA, 401K, 403B, or SEP. All monies in these plans are pre-tax dollars. As they are withdrawn, income tax will have to be paid Therefore, $50,000 in a savings account and $50,000 in an IRA do not have exactly the same value. This must be considered when dividing the assets.
Social Security Issues. It is not possible to have the Social Security Administration issue checks as part of a divorce. It is, however, important to know the rules by which Social Security is paid. For a long term marriage, it is possible after a divorce, that a spouse may actually have more income by taking 50% of his/her spouse’s monthly benefit as opposed to 100% of his/her own.
It is important to keep these unique issues in mind when going through a gray divorce.