Let's face it; by the time a couple gets into their 50s, they have probably acquired more assets than a couple in their 30s or 40s. These could include real estate, automobiles, second homes, businesses and other investments. In a recent article that appeared on AARP.com, "5 More Tips About Late-Life Divorce and Your Money," the financial entanglements of late-life divorce include everything from Social Security benefits to business debt and estate planning.
While there are plenty of great resources out there for dividing up marital assets, it is always best to consult with a Colorado Springs family lawyer. Meanwhile, it might be worth reading a book by Janice Green, called "Divorce After 50: Your Guide to the Unique Legal & Financial Challenges." Of course, your attorney will be the expert who will ultimately guide you through the legal maze of disentangling your finances, but it helps to have a clear understanding of the process.
The AARP article breaks down a few of the commonly asked questions from late-life divorcees. Here are some of the tips that Janice Green shares in her book:
1. How does one prepare for post-divorce living expenses?
The most important thing to do when you first sit down to review finances is this: compile an exhaustive and accurate list of all necessary and discretionary living expenses. Until you do this, you won't know how much income you'll need, post-divorce. Keep in mind that you and your ex-spouse will also be dividing marital debt. Income can come from various sources, including your job, alimony, note payments between spouses, and passive income from assets. It is important to be very accurate in your assessment of living expenses because, as an older divorcee, you will have less time to bounce back from divorce-related financial issues.
As a Colorado Springs divorce lawyer, I always encourage clients to work on this task over several days because it will take that long to compile all the financial records. I also recommend that they work with a financial advisor who can challenge their assumptions about income and expenditures. Doing so always provides a more precise outcome, and this is crucial in a "gray divorce."
2. What needs to be changed in your estate planning?
Estate planning is definitely relevant in a late-life divorce, and it should be considered seriously. Before you file for divorce, make any necessary changes in your will, such as the beneficiaries and executors. Your attorney will be able to tell you which changes can be made before and after a divorce, but you probably won't want your soon-to-be-ex spouse to have the power of attorney, especially when there is a conflict between you.
You will find that estate planning will be an important part of your marital property settlement. Depending on how amicably you divorce, it might be wise to create trusts for each other or include provisions in your will that benefit the other spouse. An example of this would be set aside funds in a trust to pay for a spouse to go back to school or pay off long-term debt. It will also be important for your lawyer to review any wills or estate plans that were drafted prior to the divorce, just in case they have limitations included that prevent certain actions during a divorce.
Part of your post-divorce plan should include re-executing wills and ensuring that they are in compliance with the terms of your divorce agreement. In most states, a former spouse will automatically be unable to serve as a trustee or estate administrator, but don't assume this is fixed and don't consider it done until you sign off on a new will.
3. How do late-life divorcees survive the financial upheaval?
Many people in this age group have a high level of anxiety about finances, primarily because there is so much more at stake. Here are a few suggestions from the article.
• Start exploring your options for continued health insurance coverage. Late in life, this is always a big concern, particularly if the individual seeking insurance is between 50 and 65, not employed, and too young to receive Medicare. .
• Whenever possible, consult with a financial planner who can help you accurately project your post-divorce living expenses. Don't agree to a divorce settlement until you have assurance that your financial needs will be met.
• Accept that your lifestyle may need to change. This could mean a return to the workplace or a longer wait until retirement. It could also mean you decide to start that business, but all is not lost. Most people find that a late-life divorce can give them a new sense of purpose, so they "grab their bootstraps" and find a new resilience that guides them along.
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