“Gray divorce” is a term used to describe senior couples who are separating. Since the 1990s, the divorce rate for those aged 65 and over has roughly doubled. Older Americans facing divorce may have more assets to split, including 401(k) plans and IRAs. The American Academy of Matrimonial Lawyers reports that after spousal support, disputes over retirement monies come in second on the list of issues divorcing couples argue about.
Federal law supports couples agreeing to split employer-based retirement plan monies by allowing them to get a qualified domestic relations order (QDRO). The order comes about as a court ruling that lays down exactly how workplace retirement funds will be split. A QDRO is not necessary to divide IRA accounts. While taxes will be assessed on dispersed retirement funds, rolling funds over into an IRA will put off the associated tax bill until the money is withdrawn.
Note that tax laws regarding alimony will change beginning on Jan. 1, 2019. Starting next year, the recipient of alimony will no longer be taxed on that money just like those who currently receive child support. However, the person paying spousal support will no longer receive a deduction for the payments.
The high-asset divorce processes may also include making decisions about a marital home. It is important to know that tax laws for homeowners have changed as well. If one spouse plans to keep the house, they need to consider whether it is an affordable option.
Divorcing couples also have to consider several other details, such as health care matters and tangible property division. An attorney who specializes in family law may help by providing guidance throughout the process.