Unique issues facing divorcing seniors
An interesting phenomenon has occurred in recent years. An increasing number of people have divorced later in life. This is “gray divorce,” and it results in many people spending their golden years single. In these cases, the kids are already out of the house and the couple has begun to look toward retirement. While many of the same issues will come up as in any other divorce, there are certain problems older divorcees can expect to encounter.
Difficulty dividing retirement accounts
First, both spouses need to consider what type of retirement accounts they each have. Many companies offer their employees 401(k)s while governmental organizations offer pension plans. Therefore, if your spouse works as a police officer, firefighter or teacher, then he or she likely has a pension. You need to figure out how to divide such an asset. Government pensions are not as easy to divide as corporate pensions, so you need to determine the value of your retirement account before proceeding.
Finding the right life insurance policy
Anyone paying alimony needs to have a life insurance policy equal in the amount of alimony agreed to within the divorce decree. You may need to look for new life policies when you turn 58, and this new one needs a death benefit and coverage for alimony obligation. You could end up with a rather high annual premium.
Determining how to separate inheritances
When you receive an inheritance from a parent, it automatically becomes “separate property.” This means in a divorce, you would retain all rights to it, so it is not subject to division in the event of a divorce. However, if you co-mingled your inheritance with marital property, then it becomes much murkier. Both spouses likely have an inheritance by the time they reach their 50s or 60s. Each spouse may want to retain what they got from their parents, but the court may not view it as an equitable division of assets.