California couples should be aware of ways they can financially divorce-proof their marriages. Financial strife is a major factor in why couples divorce. A survey suggests that 59 percent of divorced couples at least partially blame financial issues for their divorces. Another 20 percent claim that financial issues were a major factor in why they divorced.
"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.
Older California couples who are considering separating may be worried about how divorce will affect retirement security. However, there are some steps that these people can take to help lessen the impact a "gray divorce" may have on their retirement assets.
A divorce in California can significantly alter a person's financial circumstances. Therefore, prior to getting a divorce, it is important to get an inventory of the assets and liabilities a household may have. Cash, money in an investment account or the value of a retirement account are all considered to be assets. Generally speaking, they are eligible to be divided in a divorce settlement.
When older couples in California decide to split up, the divorce can carry some major financial consequences. While child custody and support are generally not issues for seniors, property division can become more complex. Many couples over 50 have accumulated decades of marital property together and often have large retirement funds that will need to be divided as part of the divorce.
A California divorce requires the division of marital property, which often includes individual retirement accounts. These vehicles can only have one name on them, but a divorce generally treats retirement savings as marital assets. An IRA inherited by a person, however, could be classified as a nonmarital asset. Despite this status, some splitting couples have been dividing their inherited IRAs within their divorce settlements. Unfortunately, there are no Internal Revenue Code provisions that deal with this issue.
California residents who get a divorce should be prepared for the impact that the process can have on their finances, particularly those earmarked for their retirement years. According to the results of a study conducted by the Center for Retirement Research, households that have not experienced a divorce have a net financial wealth that is almost 30 percent more than that of similar households in which a divorce has occurred.
For those going through a divorce in California, the financial impact can be significant. The divorce itself could result in an individual losing a significant percentage of assets built up over his or her lifetime. Furthermore, it can be more expensive to live as a single person after a divorce than it was while married. However, by keeping and following a detailed budget, it can be easier for people to gain control over their finances.
Older California couples may be more vulnerable to divorce than they were in the past. The divorce rate for couples over 50 has doubled since the 1990s. However, for people who have not handled the marital finances, divorce may be particularly difficult as they might be learning about financial matters for the first time in their lives.
High asset divorce cases often have a dynamic that is usually not present in other marital dissolution cases. When a California couple with substantial financial holdings divorces, locating and understanding family finances is critical when a fair distribution of assets is the goal. If one spouse is responsible for keeping financial affairs in order, the other should get up to speed before filing for divorce.