Couples over the age of 50 are the fastest growing segment of the population to divorce – which can be disastrous financially if mistakes are made in dividing assets. Here are some things to watch out for:
Understand the true value of retirement funds. For many boomers, their retirement accounts can be their most significant asset. The value of those accounts is not the balance, since withdrawals are taxed – experts say the true value is about 65 percent of the balance. If one spouse takes the house and the other takes the retirement accounts, what looks equal on paper could turn out to be horribly lopsided a few years down the road.
Don’t overvalue alimony. Alimony is often used to compensate for discrepancies in a couple’s income, but relying on monthly alimony payments gets much riskier after 50 since the chance of the payer dying is greater. You may want to consider getting a life insurance policy on your ex as a precaution.
Don’t undervalue Social Security. If you were married for more than 10 years, the lower income spouse is entitled to half the higher income spouse’s Social Security benefits once she or he turns 62 and is not remarried. This should be figured into alimony negotiations.
Don’t forget the kids. Couples who divorce later in life won’t usually have custody battles to deal with, but they may still want to protect assets for their children in case of their remarriage. You can create a lifetime asset protection trust to protect your assets for your children, and keep them protected in case your children divorce.
If you’d like to learn more about how we can help you with your long-term care and Medicaid planning, please contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.