While many young married couples worry about divorce, reports show that it may be the older couples that should be more worried. According to a recent study, the divorce rate among people over the age of 50 doubled between 1990 and 2009. At the end of that range of time, one in four divorces involved someone 50 years or older.
People from Ohio have often accumulated a considerable amount of assets by the time they celebrate their 50th birthdays. If the marriage ends after this time, it is likely going to result in a high-asset divorce. Marital property such as homes, cars, décor, jewelry collections and pets will have to be divided in a settlement.
One of the most valuable assets for individuals entering the second half of their lives is the retirement fund, and, if a divorce occurs, it is likely that it will be divided between spouses. Some people have pension plans, others have 401(k) or 403(b) plans. Just by reading the handful of different retirement plans, one can quickly assume that the division of such plans can be complicated.
According to experts, the process is just that: complicated. There are many tax implications with the division of such funds on top of the administrative and legal issues involved and because of these, the process is often mishandled.
First and foremost, a divorcing spouse should understand that retirement funds added during a marriage will be treated as marital property. While married, it is likely for a couple to plan their later life around one another, and retirement funds often reflect this sentiment financially.
When it is time for the division of such funds, federal guidelines dictate the process of splitting 401(k), 403(b) and other similar plans. If a divorce settlement does not clearly define how these funds should be split while keeping in mind the regulations for each type of fund, the division may not go smoothly.
Source: Forbes, "How Divorcing Women Should Handle Retirement Accounts and Pension Plans," Jeff Landers, June 13, 2012