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Divorce later in life can carry financial consequences

For couples in Missouri who reach the decision to divorce later in life, the financial impact of the end of a marriage can be particularly jarring. Deciding to divorce after 50 can mean that the partners involved have less opportunity to make a financial recovery after the asset division and monetary losses involved in a divorce. While both partners may be planning to rely on savings they have accumulated throughout their lives, they will now need to support two households with the same amount of money and property.

Since the 1990s, the divorce rate of Americans over 50 has doubled, and this number is projected to continue to grow. For those who are married two or three times, the divorce rate is even higher than those in first marriages. Experts advise taking action to protect the retirement savings of both parties as a priority in a later-in-life divorce.

Mistakes to avoid when dividing a retirement account

When a couple in Missouri is getting a divorce, it might be necessary to make distributions from a retirement account as part of the divorce settlement. If the account is an IRA, this is fairly straightforward although the couple will still need to observe certain regulations such as rolling the distribution into another IRA in order to avoid paying taxes and penalties. If the retirement account is a 401(k) or a pension plan, the process is more complicated.

The couple will need a document known as a qualified domestic relations order, and this will need to be carefully prepared by an attorney and approved by a plan administrator. Its contents must be consistent with the information in the divorce agreement regarding the division of the retirement account. This division is best expressed in percentages instead of dollar amounts because the account's value may fluctuate. If there is more than one account, each account will need a separate QDRO.

Early financial planning helps mitigate divorce impact

It may seem illogical to prepare for a potential divorce while also planning a wedding, but that is exactly what many pragmatic couples in Missouri and elsewhere are doing. High divorce rates make asset protection a concern in the event a marriage fails, and implementing strategies designed to mitigate exposure is considered by many to be a form of insurance they hope never to use.

There are a number of ways couples can insulate themselves from financial depletion if their marriage fails, but the gold standard remains prenuptial agreements. Any contract is only as good as its drafting, and this is especially true for both pre and postnuptial agreements. With careful wording and attention to equitable guidelines recognized by the courts, these agreements can streamline the divorce process and limit acrimonious litigation if things do not work out as planned.

What is a QDRO and why might you need one?

When going through divorce, many aspects of your life and your soon-to-be ex-spouse's life will need assessing. Because you will essentially split two shared lives into two individual lives, many minute decisions will need making. In particular, you may have concerns regarding property division and ensuring that you receive your rightful share of the assets.

In order to make sure that you understand to what you may be entitled, you may want to start by reviewing your assets. Once you know what property counts as marital and what counts as separate, you could gain a better idea as to what could remain yours or come into your sole possession after the legal proceedings. You may want to pay particular attention to retirement accounts, as you could easily miss out on a share of funds if you do not take the proper steps.

Dealing with finances following a gray divorce

In the past 25 years, the divorce rate has doubled for people older than 50. These "gray divorces" may present certain financial issues since the spouses are nearing retirement. However, there are steps that couples in Missouri can take to protect their finances during a late-life separation.

A couple should prepare to meet with an attorney by putting together a list of assets as well as the employment history for each spouse. The assets list can serve as the basis to begin thinking about property division. It's important to keep past employment in mind because people may have money from a deferred benefit plan, stock option, pension or other sources that they have forgotten about.

Planning ahead for post-divorce finances

Missouri couples going through the painful and sometimes protracted process of getting divorced typically view the signing of the final decree as a finish line. While getting a judge's signature on the dotted line is a major milestone, it's not the end of the process. The court order is more like a set of instructions for the parties.

Prior to getting the court order finalized, the parties should have an action plan in place designating exactly what will be done and by whom. For example, real estate is to be sold and equity divided. If automobile titles are to be transferred from joint to individual ownership, someone must do the legwork and pay the fees. If one party refuses to cooperate, it can be brought to the attention of the court and a finding of contempt is possible. However, it's always best to avoid drastic measures when possible.

Why revenge shouldn't be the goal of a divorce

Missouri residents may feel like divorce is the best way to get back at a spouse who has cheated or committed some other unsavory act. However, this is generally not the case. While trying to exact revenge on a spouse, a parent may inadvertently put his or her kids in the middle of the dispute. It is important to remember that children should have positive relationships with both parents.

In fact, an individual's own relationship with his or her children could be damaged by not allowing a relationship with the other parent to develop. In some cases, getting revenge doesn't make an adult feel any better either. While there may be short-term satisfaction from obtaining it, that feeling rarely lasts. It is also important for those seeking a divorce to know that the judge may not be moved to hear about the bad things a spouse supposedly did.

When life changes, your child support may also change

When you and your spouse married, you probably expected the marriage to last forever. When things didn't work out that way, you may have felt confused and uncertain. The divorce settlement left you with a fair portion of your marital assets and debts and a child support payment based on your income, your spouse's income and the total of your other obligations.

You may have expected this arrangement to last a while too. However, by now you may realize that nothing is certain. If circumstances have changed that make it increasingly difficult for you to meet your child support obligations, the worst thing you could do is to ignore the situation.

Divorce can lead to several tax changes

The financial considerations that come with the end of a marriage can take many Missouri divorcees by surprise. A divorce always carries significant emotional and practical consequences, but the financial impacts of a split can last for many years. For example, ex-spouses will have to consider their new roles as independent taxpayers.

An ex must update their income tax status for the year of the divorce, no matter which month the order was confirmed. The filed income tax returns are due before April 15 of the next year. For the tax year in which the divorce was finalized, both former spouses must file their taxes as single. If the divorce was not yet officially final before December 31, however, divorcing spouses must file their returns for that year as a married couple.

Tax law changes cause a rush towards divorce

Some Missouri couples may seek to move up their plans for divorce following changes to American tax law signed into effect by President Donald Trump in December 2017 that are scheduled for implementation beginning in 2019. Annually, approximately 800,000 couples across the country get divorced. However, in 2018, that number could be higher as people act quickly to avoid the implementation of the changes, which could make it more costly to pay alimony.

Divorce lawyers across the country have stated that they have seen increased numbers of inquiries and requests for consultation after Congress passed the tax law at the end of 2017. People with significant assets who may be expected to pay substantial amounts of spousal support have been particularly concerned about the change. Under the existing tax laws, the person who pays alimony can deduct a portion of that expense from his or her annual tax filings.