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Staying mindful of money in divorce

For divorcing couples in Colorado, deciding how to handle proceedings may prove to be difficult. Divorce rates involving couples over the age of 50 is on the rise, according to some reports, and older couples might need to focus on different aspects of divorce when planning for financial stability after the proceedings are over. Many people consider their homes to be an important asset to consider when involved in negotiations, but Social Security benefits and retirement accounts might also be effective assets when considering the future.

Many people are unaware that they might be entitled to some of their spouse’s retirement benefits or savings. According to a recent survey, about 31 percent of divorced individuals did not know that they might have been able to acquire a portion of a former spouse’s IRAs or 401(k)s. These accounts are especially important to older individuals because each account has probably accumulated a large amount of funds because the account holder is closer to retirement.

When attempting to divide such assets, couples might need to take certain steps to avoid negatively affecting the accounts’ values. For example, taking funds out of an account early might result in tax penalties, decreasing the asset’s worth. However, certain legal orders, such as a Qualified Domestic Relations Order, might be used to transfer a portion of an account from one spouse to another without incurring a penalty.

For people going through divorce, the process of asset division may become extremely confusing, and having professional legal guidance may be helpful. An attorney who is familiar with family law might be able to help a client understand his or her rights and obligations during divorce settlement negotiations.

Source: Forbes, “The Big Money Mistake Divorcing Women Make“, Kerry Hannon, July 03, 2014

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