This article looks at 5 mistakes to avoid when divorcing over 50. If you wish to check out our detailed analysis on the financial implications of a gray divorce, you may go to 13 Mistakes to Avoid When Divorcing Over 50.
5. Transferring your former partner’s retirement account to an IRA
Insider Monkey Score: 18
Moving assets from one spouse’s IRA or retirement plan into another takes planning and paperwork. Nevertheless, doing so and tapping into these funds before the age of 59 ½ will have you paying the 10% withdrawal penalty. However, suppose you manage to protect your retirement assets through a Qualified Domestic Relations order (QDRO). In that case, it will allow you to make a withdrawal from your ex’s 401(k) or 403(b) without paying the 10% tax penalty.
4. Hiding, relocating, or devaluing assets
Insider Monkey Score: 18
In a divorce, where particularly a lot of money is at stake, one might be tempted to hide, relocate, or even devalue their assets. However, when the truth emerges, one might be in for some real legal trouble. Repercussions for hiding or devaluing assets include giving your partner additional assets, fraud or perjury charges, or contempt-of-court rulings.
3. Neglecting to factor in your monthly expenses
Insider Monkey Score: 20
Household expenses can change drastically when the same income is suddenly needed to run two households instead of one. When this happens, neglecting to factor in monthly expenses can create havoc. Essential costs such as healthcare, groceries, and even rent can become a struggle to cover; there will be budgeting issues, and eventually, debt will accumulate.
2. Not updating your beneficiaries and estate plan
Insider Monkey Score: 21
Failing to update your beneficiaries and estate plan can result in unintended consequences. For instance, your financial assets and even life insurance policies will still have your ex-spouse designated as the beneficiary. If you pass away, your assets will go to them instead of your intended beneficiaries. It may also result in property ownership confusion, estate tax issues, and other legal challenges. For this reason, you must update your beneficiaries and estate plan unless court orders not to do so.
1. Not retiring with your fair share
Insider Monkey Score: 22
Getting through the divorce proceedings as quickly as possible may seem wise, but retiring without your fair share is not. For this reason, it is important to secure your retirement assets or risk leading a financially difficult life during your retirement years. Moreover, without having your fair share of retirement funds, you will also have difficulty covering your living expenses, healthcare, and other expenses. As a result, you will eventually have to delay your retirement, lead a lower quality of life, or even worse, become financially dependent on others.
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