Protecting Your Retirement During Gray Divorce
If you are over 50 and thinking about divorcing your spouse, you are not alone. So-called gray divorce is growing. The number of people divorcing after age 65 has more than doubled since 1990, according to the Council on Contemporary Families. People in this age bracket may be looking forward to retiring soon or may be retired already. In either case, divorcing seniors need to make sure they protect their retirement resources. Each spouse should consider issues such as alimony, property division, inheritances, Social Security and life insurance.
Older people who divorce are often in stronger financial positions than their younger counterparts. Their careers are established, and they are probably receiving significantly greater compensation than they did in their 30s and 40s. This is good news if one spouse is seeking alimony. However, their income tends to be more complex. There may be stock options, executive compensation packages, bonuses, pensions and annuities. All sources of income must be factored into either spouse’s eligibility for alimony (known as maintenance in Washington state).
As with all divorcing spouses, elders must deal with division of assets and debts. Washington is a community property state, which means that all assets and debts acquired during a marriage are divided evenly. Because only assets obtained during the marriage are divided, it is important that divorcing seniors identify the assets that are theirs alone. Known as separate property, these assets include those they brought to the marriage as well as inheritances and gifts received during the marriage.
For elders, assets are likely to be more extensive and intertwined, and the challenge is to prove that separate property was not mixed with community property. Did you add your spouse’s name to a stock account you inherited? Did you add to the education fund that your spouse received for graduate school? How much was your pension plan worth when you got married? Careful analysis of the source of each asset you own and each debt you owe is essential for an accurate division during divorce.
Another issue is retirement income. Spouses in long-term marriages may be eligible for part of the other’s Social Security payments. However, there are restrictions and receiving payments is not guaranteed. Pension and 401K plans are usually considered marital property. However, if the plan was begun before the marriage, there could be restrictions on how benefits are treated during property division.
Still another issue is life insurance. If you are receiving alimony, it’s advisable for you to take out a life insurance policy on your ex to guard against the loss of income if he or she dies. The best strategy is to have the alimony recipient be both the owner and the beneficiary of the policy.
If you are a Washington senior contemplating divorce, call family law attorney Leslie R. Bottimore at Bottimore & Associates, P.L.L.C in Tacoma. Call 253-272-5653 or contact us to set up a consultation.