For many Americans, saving for rainy days and retirement comes with getting older. With careful planning and wise decisions, when someone gets to be of retirement age or has a spouse who does, they will be financially stable without punching a clock. Marriages at different stages and ages of life are unique. The same holds true for divorces.
A couple divorcing in their twenties after having two kids will face unique challenges apart from a newlywed couple in their 40s or empty-nesters who divorce in their 50s or even later. One of the challenges specific to a gray divorce is that of estate planning. Even still, an experienced Illinois divorce attorney can help you in this process so that you have the best outcome possible.
A gray divorce occurs between a married couple who are at least 50 years or older. A gray divorce adds another layer of complexity to the already often emotional and contentious estate planning process arising with blended families, designation of heirs, and the ever-changing domestic structures. Since this type of divorce comes with more than concerns over asset division, it requires the careful attention of a knowledgeable Illinois divorce attorney who is well-versed in gray divorce.
There are countless ways in which a gray divorce can impact each spouse’s estate planning. Just like other assets, retirement accounts will need to be dealt with in a divorce. Since spouses in a gray divorce have fewer working years left to make contributions to their retirement accounts, their impacts can be significant.
Early withdrawals from retirement funds can result in penalties and fees. If this is a significant issue, one or both spouses may have to put off their retirement and adjust their standard of living. However, one option either spouse might have to protect themselves financially is to ensure the spouse with a pension has elected survivor’s benefits that will extend to their former partner. Without this election, retirement benefits will stop when the participant spouse is no longer living.
It’s imperative to review any tax issues before finalizing the separation agreement so that neither spouse ends up with a tax bill that could have been reduced or even altogether avoided. A Qualified Domestic Relations Order (QDRO), which is designed to accomplish the division of these assets and to ensure a tax-free transfer, will be necessary.
Couples facing this type of divorce frequently have more inherited, gifted, and commingled assets, making asset division even more complex. It’s also common for spouses in a gray divorce to have already paid off their homes, only adding to the intricacies of property division. Whether one spouse keeps the home and pays the other for their portion or they sell the house and equitably divide the proceeds, determining what to do and how will impact estate planning.
Depending on the family structure, wills and beneficiaries will need to be changed. It’s essential to note that an ex-spouse could receive your life insurance or other benefits without documented and legal changes even if you pass away decades after the divorce is final. By hiring an Illinois divorce lawyer, you can be assured that you will have all of your bases covered, and the changes that need to be made are not forgotten.
If reading this makes you feel somewhat overwhelmed, you’re not alone. These are complicated matters that will benefit from the expertise of a seasoned Illinois divorce attorney. Contact the Goodman Law Firm to schedule your gray divorce consultation today.
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