Dividing Assets in a Gray DivorceBy Moskowitz Law Group, LLC |
As we discussed in a previous blog post, divorce rates among older adults in the U.S. have steadily increased. Since divorce rates for adults over 50 have doubled since the 1990s, Americans ages 55 and older now comprise the age group with the highest percentage of first-time divorces. While the increase in divorce rates among older Americans may be contributed to by changing views on marriage or other factors, the fact is that they have sparked the creation of a new term “Gray Divorce.”
Gray divorce is used to describe divorce proceedings involving older adults primarily because the individuals involved commonly have their own particular set of issues and concerns to address. This is especially true given the fact that older adults are at different phases in their lives, both financially and emotionally, and because their divorces can entail challenges and issues such as:
- Retired spouses on fixed or limited incomes
- Social Security benefits and other government age-based benefits
- Large financial portfolios and high net worth
- Larger retirement accounts, pensions, and employee benefits
- Considerable assets and property
- Family homes and real estate investment properties
- Stocks, bonds, and financial investments
- Adult-age children
- Longer marriages
- Various medical needs
These issues all have the potential to create additional challenges during the divorce process especially as they relate to property division, or the division of assets and debts acquired by spouses during their marriages – of which there can be many when divorce involve couples who have been married for many years. While spousal support (alimony) can also be impacted by longer marriages and more assets, this blog will focus on the aspects of dividing assets and property division.
Issues Older Spouses May Need to Address in a Gray Divorce
Below, our legal team at Moskowitz Law Group, LLC discuss a few of the important issues older spouses must address in a gray divorce.
- Future plans – As individuals approach retirement, or have already retired, getting things right in a divorce becomes all the more important. That’s because retirees will have limited income, and even with years of careful planning and saving, outcomes reached in a divorce proceeding can compromise their ability to live comfortably in their retirement years, or even delay retirement.
- Retirement accounts – Future plans are particularly an issue when it comes to dividing retirements accounts. Under New Jersey law, retirement accounts are considered community property subject to equitable distribution, which means fair and just rather than a 50-50 split. While spouses can come to agreements on their own about dividing retirement funds, or raise disputes that require litigation in court, it is important to remember that valuing and dividing retirement accounts isn’t always an easy or straightforward process. There are unique laws that can apply, terms and regulations that can vary depending on the type of account involved, and financial or tax implications that may arise when an account holder wants to withdraw funds. As such, spouses in a gray divorce need to devote particular attention to correctly handling, valuing, and negotiating terms for the division of their retirement accounts, whether that includes a 401(k), IRA, pension, or other employee benefits. New Jersey, like other states, requires that spouses use a qualified domestic relations order (QRDO) when dividing retirement plans earned through employment between spouses in divorce. The division of other retirement accounts, such as an IRA, have unique implications and issues to address.
Complicated financial situations – Older adults typically have more complex financial situations, not only as a result of any retirement accounts they may have, but also due to other factors. These may include real estate such as a family home, more physical assets like cars or furniture, multiple and varied investment holdings, annuities, rare and valuable collections, and more. Often, such financial issues make it important for divorcing spouses to work with qualified attorneys who can not only protect their rights when it comes to getting their fair share, but also accurately valuing complex assets for the purpose of equitable distribution.
- Social Security – By law, benefits received through Social Security are not considered community property, which means they are not subject to division in divorce. However, there may be circumstances where one spouse who worked part-time or less than the other in order to raise children or take care of family needs would be entitled to less benefits than their spouse. In such situations, negotiations can help spouses arrive at agreements to account for this discrepancy, such as exchanging certain assets to make up for the difference, or awarding more money in the form of spousal support payments.
Moskowitz Law Group, LLC The issues that may arise in your case will depend largely on the unique circumstances and facts involved, which is why it becomes important to work with experienced family law attorneys who not only have the insight and resources to address the issues you face, but also the willingness and approach to devote the personalized service your case deserves.
At Moskowitz Law Group, LLC, our New Jersey divorce attorneys have helped clients from all walks of life protect their rights and interests during their unique divorce cases. Backed by decades of collective experience, our team is available to help you learn more about the issues that may be present in your divorce, as well as the steps we can help you take to address them effectively.
To discuss a potential case with a member of our team, contact us for a free and confidential case review. Our firm proudly serves clients throughout New Jersey and New York from multiple office locations.