Crafting a divorce settlement later in life
Those who divorce at an older age generally don’t argue over child custody or child support matters. Instead, the primary issue is how to divide assets in an equitable manner. Specifically, most older couples tend to spend most of their time determining how to divide a retirement account such as an IRA or 401(k). In some divorce cases, a couple may choose to divide the money in the account 50/50.
However, this isn’t necessarily the best way to do it. Even if assets are split evenly, it must be done in accordance with a divorce decree. For a qualified plan such as a pension or 401(k), the split must be done in accordance with a qualified domestic relations order. Such an order allows for money to be transferred from one account to another without any tax consequences. If money is removed from an account, an individual avoids the 10 percent early withdrawal penalty if it applies.
Those who need to divide annuities in a divorce should do their best to avoid cashing out early as it can significantly reduce their value. Regardless of what types of assets a person needs to divide in a divorce, the end of a marriage will come with financial consequences. This is because two people are now trying to live separate lives on a single income.
An attorney may be helpful when it comes to helping a person understand divorce legal issues such as dividing property. Generally speaking, everything that was acquired during the marriage may be eligible to be divided in a settlement. Legal counsel may be able to take steps to help a person obtain as much marital property as possible.