Protecting Your Family's Future

Divorce at Retirement—Pay Attention to the Details

Late-in-Life Divorce—Watch Out for Impact on Retirement Assets

Over the last two decades, the rate of divorce among 50-somethings (and older) has more than doubled. Even though there is less likelihood of disputes over child custody, visitation and support, there are other factors that make these types of proceedings complicated and time-consuming. Marital estates tend to be more substantial and the parties often have significant retirement assets.

Paying Attention to the Details

If you are involved in a divorce, have substantial retirement plan assets and are at or near the end of your working life, you need to take great care when attempting to divide retirement or pension plan assets. With an IRA, you can split the value and roll a portion of the funds over into a new IRA without any tax consequence simply by setting up the new IRA and making the tax-free rollover. However, if your retirement is in a 401(k), 403(b), or other qualified plan, you will need the court to issue a Qualified Domestic Relations Order (QDRO) or you will incur tax on the transfer.

Another concern may involve your home. For many, the equity in their home is a substantial retirement asset. In a divorce, you may consider selling the home and splitting the proceeds, but there can be adverse tax consequences to doing this. You are best-served to discuss the matter with a tax professional and/or a lawyer before you make any decision.

You should also reexamine your insurance coverage as part of a late-in-life divorce. The policies will likely name your ex as a beneficiary. In addition, you may need to seek new source of insurance coverage.

Contact Stewart Law, PLLC

At the office of Linda Stewart Law, PLLC, in Baytown, we bring more than 10 years of experience to clients in south Texas.

To learn how we can help, call our office at 281-420-8020 or contact us online. We offer an initial consultation at a reduced fee of $50. We accept credit cards and will set up a payment plan, if appropriate. Our offices are open Monday through Thursday, from 9 a.m. until 5 p.m., and until noon on Fridays. Evening and weekend appointments can be arranged upon request.

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