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What older people should know about divorce

On Behalf of | Mar 16, 2020 | Divorce |

According to Pew research, the divorce rate for those 50 and older has doubled since 1990. In many cases, Texas residents who are ending their marriages will have an attorney to help them navigate the process of doing so. However, it may also be a good idea to have a financial adviser on a divorce team as well. A financial adviser will likely be able to help with potential challenges arising from the passage of the 2017 Tax Cuts and Job Act, or TCJA.

For instance, it is important to understand how alimony rules have changed since the TCJA came into existence. Alimony payments are no longer considered income to the recipient, and these payments are no longer a tax write-off for the individuals making them. However, any money that is distributed to an individual through a retirement plan could be taxable to the recipient. It is possible that the payee will insist that funds come from a retirement account instead of a personal account.

In addition to financial issues that could arise in a divorce, it is important to consider how the end of a marriage could impact an estate plan. In many cases, it won’t be possible to change the beneficiary on a retirement plan or pension until the divorce is final. This is because a spouse is typically the beneficiary by default.

Regardless of how old a person is when he or she gets divorced, it may be necessary to divide marital assets as part of a final divorce settlement. If retirement assets are split as part of that settlement, it may be necessary to do so through a qualified domestic relations order, or QDRO. An attorney may be able to draft the document or explain what happens if assets are split without one.