Older California couples whose marriages are ending might be surprised at just how costly their divorces might be. Between fees for legal representation, tax implications and even long-term financial adjustments, gray divorces can become very expensive for the parties involved.
A gray divorce is also often a high-asset divorce because older couples have often been married for a long time and have accumulated significant assets. In this type of divorce, property division negotiations can become strained due to how important an impact they can have later on in life, since the parties involved are closer to retirement age. Some of the challenges involved by those over 50 who are getting a divorce include limited job options due to their age and often already being at the highest end of their earning potential.
Older couples need to consider being cooperative during the negotiations to avoid higher costs than necessary. For example, there are considerations when it comes to keeping the family home in exchange for other assets or selling the home, and splitting the profit.
Another consideration is how to divide retirement accounts. While in the midst of the divorce, one of the parties might demand to withdraw a share of the account. However, it is important to remember that withdrawing money early from 401(k) and IRA accounts results the money being taxed as well as receiving a 10 percent penalty for early withdrawal if the account holder is under 59 ½. This can be avoided by rolling the distribution into an IRA. An attorney can provide further advice and counsel in this regard.