Divorce can be challenging, even when amicable. Though, divorcing later in life in a gray divorce is a much more complicated process because the spouses have decades of financial accounts and assets to split. Indeed, as spouses get closer to retirement, the property division process can become much more problematic for their post-divorce lives.
Does divorce really take a financial toll?
Yes! A recent divorce study by Ohio State University found that a family’s wealth dropped by nearly 80 percent post-divorce. That is a huge number! Of course, if the divorcing couple is Bill and Melinda Gates, finances will not be an issue, but that is simply not the same for many gray divorcees.
How to avoid escalating costs and fees?
Everyone knows that one should never go through a divorce without an attorney, who helps one understand and navigate the system, but the longer an attorney is needed, the more money those services will cost. The key here is allowing both sides’ attorneys to do their job to reach an amicable solution. Check those hurt feelings at the door and realize this is now a financial transaction with the goal of minimizing costs and fees to maximize the assets distributed to both spouses. While it may feel good to fight over everything, in the end, if the costs exceed the assets, then one’s post-divorce life will be much harder.
What about estate planning?
Do not, and we repeat, do not forget to update the estate planning documents immediately upon seeking a divorce. This is something that is often overlooked. Life insurance policies pay to the beneficiary, even if it is an ex-spouse. Similarly, wills that distribute assets to an ex-spouse will be enforced if not updated. And, for especially contentious divorces, do not forget to update a medical power of attorney.
What about retirement accounts?
Remember, marital property will likely include a significant portion of each person’s retirement accounts, though for accounts that began prior to marriage, it may not be as simple as a 50/50 split. This means that it may make sense to agree to a settlement that does not include a 401(k), but that includes another asset. The key is working with one’s Birmingham, Michigan, high asset divorce attorney and financial expert to figure out what is best and equitable.