Special Issues in Late-Life Divorce
Divorce after 50 is different from divorce when you are younger.
Couples can divorce later in life for the same reasons younger couples split up -- infidelity, financial pressures, regrets about earlier decisions, or a desire for greater independence. But when you're over 50, these reasons are framed by aging and the realization that you have more years behind you than ahead of you. Older couples face unique aging-related issues that can factor into the decision to divorce -- including health concerns, tensions brought on by living in closer proximity in retirement, losing parents and friends, and even the unsettling loss of youth.
While there are differences in the emotional impact of divorce for couples who end their marriage later in life, the biggest difference is that there is less time to recover financially, and this reality colors many of the issues that are unique to late-life divorce. If you're filing for divorce later in life (or are just considering it), here's a look at some of the challenges you might face.
Dividing Assets at Divorce
Part of the divorce process will be dividing your assets with your spouse. The market value of an asset isn't always the only consideration when you're making these decisions, because some assets will be more useful to you later in life than others. For example, you may have difficulty deciding who gets to keep the house for a number of reasons. Let's look at several types of assets.
Keeping your house provides you with future benefits that might be more important the older you are because of the following factors.
- Age triggers eligibility for real estate property tax exemptions and waivers.
- You are eligible for a reverse mortgage beginning at age 62. A reverse mortgage offers a potential stream of income. (To learn more, see Nolo's article Reverse Mortgages for Retirees and Seniors)
- Primary residences receive special treatment for people qualifying for public benefits (for example, Medicaid).
- Tax benefits such as deductions for mortgage interest and taxes and exclusions from gains upon sale can be important in later years. (See Nolo's article Your Home as a Tax Shelter for more information.)
- Owning a house means you have potential rental income.
- Keeping the house means you have access to equity even if you decide to downsize.
Dividing retirement plans can be complicated, and requires careful attention when your lawyer is preparing the final paperwork for your divorce. You may need a separate court order, usually called a Qualified Domestic Relations Order (QDROs), to cover the division of retirement benefits. Before making any decisions about retirement, get a copy of the Summary Plan Description from the retirement plan administrator. You should probably talk to a lawyer and find out about:
- when you can receive distributions and still avoid tax penalties
- whether you can get survivor benefits if your spouse dies, even after the divorce
- whether your spouse has taken any loans against a 401(k) plan that should be repaid before the funds are divided
- whether you're entitled to any contributions made to retirement plans after the divorce
- whether you can get a hardship withdrawal if you need one, and
- if you are a civilian spouse with military retirement benefits in your divorce, whether your rights are protected under the military's Survivor Benefit Plan.
Social Security benefits are not assets that a divorce court can divide, but the rules about benefits are relevant to your post-divorce income.
If your marriage lasted 10 years or more and you're 62 or older, you can collect retirement benefits on your former spouse's Social Security record, without reducing your former spouse's benefits, even after your divorce -- welcome news if you've been out of the workforce during your marriage. Also keep in mind:
- You may be eligible to draw benefits of up to 50% of your former spouse's benefit.
- You can begin receiving retirement benefits at age 62 on either your own Social Security record or on your former spouse's record, then switch to the other benefit when you reach full retirement age (if the other benefit is higher).
- Once you've been divorced for at least two years, you'll be entitled to benefits through your former spouse even if your former spouse is eligible but not yet receiving benefits.
If your former spouse dies, you may be eligible to receive survivor benefits of 100% of your former spouse's Social Security benefit. The basic requirements are:
- your marriage lasted at least 10 years
- you are at least 60 years old, and
- you are not entitled to retirement benefits equal or greater than that of your former spouse's benefit.
Go to the Social Security Administration's website at www.ssa.gov for more details and to obtain a current Statement of Earnings for you and your spouse.
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