Divorce After 50
Summary: Although the U.S. divorce rate has been steadily decreasing for decades, it has increased dramatically for people over age 50. In fact, according to a Bowling Green State University study, the divorce rate for senior couples doubled between 1990 and 2010, and couples over age 50 now account for a full quarter of all divorces in the United States.
Although the U.S. divorce rate has been steadily decreasing for decades, it has increased dramatically for people over age 50. In fact, according to a Bowling Green State University study, the divorce rate for senior couples doubled between 1990 and 2010, and couples over age 50 now account for a full quarter of all divorces in the United States.
Concerns of Divorcing After 50
While divorcing older couples rarely have to worry about things like child support and custody, they are likely to be more concerned about situations that include retirement and Social Security benefits, dividing complex property, spousal support, and the difficulties of learning to live alone and attempting to return to work. Older couples often have higher incomes and assets and more complicated financial situations, as multiple 401(k)s, pensions, annuities, and IRAs, are often difficult to split equitably. In addition, there are tax and penalty issues involved to make the situation even more challenging, especially as retirement approaches.
The following are some special concerns for divorcing couples 50 or older:
- You have limited time before retirement to earn money to manage two separate households.
- If you were a stay-at–home spouse, will you have to return to work and can you find a job that pays decently?
- You may have trouble adjusting to life as a single person, living alone and managing finances.
- You may need to sell your home, downsize and move.
- How will you get health insurance if you were previously covered by your spouse’s policy?
- What happens to pension and retirement plans, investments, and personal property?
Illinois Divorce Law
Illinois is an equitable distribution state. A judge may not divide property equally, but according to what is considered to be a fair and just manner after evaluating the individual circumstances of a divorcing couple. To make things equitable, often a spouse who wants the house may end up having to give up something else, such as waiving maintenance in exchange for remaining in the marital home.
In dividing property, Illinois courts consider whether the property is marital, non-marital, or property that has been commingled. Marital property consists of all assets you or your spouse acquired during the marriage and before your divorce judgment and non-marital property that has been transferred into co-ownership.
Marital property is the only property Illinois courts have authority to divide. A monetary value on the marital property and all debt accrued during the marriage, including mortgages, car loans and credit card debts will be assigned, and then the marital assets are distributed in an equitable fashion. Dividing these assets can be particularly perplexing, especially since older individuals will not have the ability or the opportunity to replace much of the money they lose after a protracted divorce.
Dividing Retirement Plans
While Illinois courts consider a pension plan that is earned during the marriage as an asset which can be divided, there are also federal guidelines involved.
Under a Qualified Domestic Relations Order (QDRO), a non-employee spouse may receive a portion of the employee-spouse’s pension plan and has the same rights under the pension plan as the employee-spouse, including early retirement. A judicial decree recognizing a divorcing spouse’s right must be submitted to the plan administrator who can then transfer what is owed to the divorcing spouse.
If you split a 401(k) plan, there is a one-time divorce-related break. If you take out cash, you will pay taxes on the distribution but you will not have to pay the 10% penalty for taking an early withdrawal under age 59½. If you put the money in your own IRA, you won’t owe taxes or a penalty.
Division of IRAs must be submitted to the IRA custodian. There is no penalty-free distribution from an IRA, so if you’re under 59½ and take out cash you will owe taxes plus the 10% early-withdrawal penalty, unless you roll it directly to an IRA.
Roth IRAs are funded with after-tax contributions, so they are usually separated from other retirement assets and split in half.
Social Security is not an asset that can be divided in divorce. After divorce, a former spouse age 62 or older, who has not remarried, is entitled to receive Social Security benefits based on earnings of an ex-spouse if the marriage lasted more than ten years and more than two years have passed since the divorce.
Due to the complexity of the issues, it makes sense for any senior contemplating divorce to seek the help of an experienced Illinois divorce attorney.
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