The concept of “gray divorce” has been written about a lot lately because people over 50 are in the only age group with growing divorce rates. However, there are special considerations that people who end their marriage after 50 need to keep in mind. The website “Investopedia” discusses common mistakes that older divorcing couples make and how to avoid them.
One common mistake is ignoring the tax consequences of the decisions you make during your divorce. In addition to an experienced legal professional, you should have a good tax advisor and/or accountant to consult with on these decisions.
For many people, fighting to get the house may be a big mistake. While it may be your instinct to stay in your home (and keep your ex from getting it), make sure you can afford the mortgage, taxes and upkeep on your own if your ex isn’t held legally responsible for helping with those things.
Many people who get proceeds from their ex’s 401(k) or other retirement account roll the funds over into an IRA. If you do that and then use the money before you reach 59-and-a-half, you will have to pay the 10 percent early withdrawal penalty. There are better options, including a qualified domestic relations order, that will allow you to access the money without a penalty. Again, getting sound financial advice is key to avoiding unnecessary loss of money.
Often, people don’t consider what kind of debt their spouse has until they get stuck paying it. Even though North Dakota is not a community property state, ex-spouses can still be liable for loans and credit cards on which their name is included. It’s wise to get a full credit report for both of you so that you have a clear picture of both of your debts.
Many people who have been on their spouse’s health insurance plan for years have never given it much thought, but it’s an important consideration after divorce. Check into your employer’s plans or those available through Healthcare.gov during the next open enrollment period. Remember that individual plans are more costly than joint plans, so be prepared for some sticker shock.
Many older people, particularly women, are financially devastated by divorce. That’s why it’s essential to make sure that you have qualified professionals not only looking out for your legal rights but for your financial well-being during and after this difficult process.
Source: Investopedia, “Divorce Over 50: Seven Mistakes to Avoid” Catherine Fredman, Aug. 18, 2014