According to a study by the Pew Research Center, divorce among couples 50 and older increased by 109% over the last twenty-five years. This phenomenon, known as “gray divorce,” puts many adults in an uncertain financial situation during their retirement years.
Pennsylvania addresses marital property in divorce through equitable distribution. That means all property acquired during the marriage is distributed based on factors the court deems fair – rather than a 50/50 split.
For those facing divorce over 50, special circumstances apply when it comes to dividing property. Keep reading to learn three crucial property division factors in gray divorce.
Dividing retirement accounts
Marital property includes all income and assets obtained during the marriage. For older couples, this usually includes:
By the time a couple passes the age of 50, their retirement account is likely one of their higher-value assets – and it gets divided along with the rest. Distributing those funds fairly is essential to ensuring each spouse can be financially independent in retirement.
The marital home
Generally, there are two ways to address the house a couple has shared. They can sell it and split the proceeds in their divorce proceedings, or one spouse might keep it in exchange for giving up other assets. Keep in mind, couples over 50 are looking at dividing a closing pool of assets. It might be tempting to keep the house for sentimental reasons but relinquishing other assets can leave someone without enough funds to live on.
Tax considerations
Older adults going through a divorce should keep in mind that, when dividing retirement assets, withdrawals may have consequences. Drawing funds from a 401(k) at age 55, for example, means paying taxes as well as penalties for early withdrawal.
At [nap_names id=”FIRM-NAME-1″], we strive to help our divorce clients through this often-painful process quickly and efficiently. Even in gray divorce, we can help couples avoid getting bogged down in the details and move toward their new future.
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