An increasing number of couples in New Jersey are choosing to divorce later in life. Statistics show that while the divorce rate has remained flat or even declined for most American demographics, people older than 50 are an exception. The divorce rate has gone up two times over for this group in the past 20 years, according to the Pew Research Center. There can be major differences when people decide to divorce at an older age. Issues like child custody and support are unlikely to be a concern. However, financial issues and the division of retirement funds are more likely to be serious issues in a “gray divorce.”
It should be noted that many couples who decide to divorce after a long marriage might reach a more amicable resolution. Even in these cases, however, people in lengthy marriages can accumulate significant assets, and distributing them can be complex and even contentious. Even when both parties have reached a clear agreement on how to divide their retirement accounts and other investment funds, there are clear rules that must be followed in order to avoid an unnecessary and costly burden in the form of taxes, fees and penalties.
For people with 401(k) and pension plans, a qualified domestic relations order, or QDRO, is necessary to divide the accounts. This type of court order is submitted to the administrator of the plan and allows one divorcing spouse’s account to be divided into another account. Individual retirement accounts (IRAs), however, can be divided upon receiving the divorce decree from the court.
When couples establish wealth throughout their lives, disentangling it in a high-asset divorce can be complex. A divorcing spouse can work with a family law attorney in order to protect assets and reach a fair settlement in terms of property division, spousal support and other major issues.