The National Center for Family & Marriage Research reports that twice as many adults over the age of 50 got divorced in 2014 compared to 1990, and the divorce rate for adults over 65 tripled. A survey also found that pensions and retirement accounts are among the most contested for this generation of divorcing spouses. Baby boomers in North Carolina who are ending their marriages will certainly want to protect those assets.
Retirement benefits accumulated during a marriage will in most cases be split during property division unless the couple otherwise agrees. The funds that go to into a retirement account are intended to run a single household. When a couple divorces, the funds are divided by the court because they have to run two households. Due to this, it is important for couples to review or modify the beneficiary designations when their marriages end to confirm that their wishes are reflected.
Divorcing spouses should also check the current and future values of their retirement accounts. The government taxes individuals when they withdraw from retirement accounts such as traditional IRAs, pensions and 401(k)s. However, contributions to Roth IRAs and Roth 401(k)s come out of income that has already been taxed, making withdrawals tax-free. This makes it more financially sensible to divide traditional retirement accounts according to their after-tax values.
Additionally, divorcing spouses should avoid trading retirement benefits for the family home or other assets. A home, for instance, is usually expensive to maintain. Retirement benefits, however, increase in value, so keeping them and giving up the family home is typically a better financial decision for divorcing spouses in their 50s and 60s.
The laws regarding property division in a divorce might be too complex for some older couples to understand. Their respective family law attorneys may answer all of their questions and walk them through the entire process.