Scott David Stewart 0000-00-00 00:00:00
Divorce to mature adults age 50 and older involves lifestyle concerns quite different from twenty-something parents raising young children. As in any divorce, the older client needs to be prepared for the emotional and legal challenges that lie ahead. For many seniors, retirement is a lifestyle awakening. Senior divorce statistics indicate that, at a time when the U.S. divorce rate dropped from 18.95 per 1,000 marriages in 1990, to a low of 17.92 in 2009, the senior divorce rate increased substantially. The National Center for Family & Marriage Research at Bowling Green University, Ohio, found the divorce rate among 50- to 64-year-olds increased from 6.9 per 1,000 marriages in 1990 to 12.6 per 1,000 in 2009. Older adults in second or later marriages are twice as likely to divorce again when compared to first-time divorcing seniors. Mature Americans, then, represent a new statistical shift toward divorce – the next wrinkle in the signs of aging. Emotional Aspects of Mature Divorce Many mature divorces involve marriages of long duration and, with that, may come extensive emotional baggage. • On Marriage Marriage. counseling is something that all clients should at least consider. If cost is a concern, then Arizona’s Family Court Conciliation Services provides free marriage counseling, a service often overlooked by mature spouses contemplating divorce. Free counseling is available when either spouse wants to attempt reconciliation or resolution of the current domestic impasse, regardless of whether a divorce, legal separation, or annulment action has been filed. On Divorce Counseling. The intensity of emotions caused by separation and divorce are sometimes palpable and may even be traumatizing. Professional divorce counseling can prepare the mature client for the emotional aspects associated with a late-in-life divorce. Almost every aspect of the mature adult’s life is subject to discussion and decision-making during a divorce – this can be extremely distressing. The process simply wears people down, making them emotionally vulnerable. Divorce counseling may help the client feel better, remain more relaxed and in control of themselves, make wiser personal decisions, and make better legal decisions, all of which will increase the likelihood of the best possible outcome in the divorce. Practical Aspects of Mature Divorce Apart from the emotional side of a divorce, an older married couple has to face financial issues that impact them solely because of their ages. For many, their major income generating years are now behind them, so careful attention must be paid to the valuation and division of assets and the need for spousal maintenance. Late-in-life divorces in marriages of long duration typically involve equal or near-equal splits of pensions, retirement savings, real property, business interests, collections, and other investments. Eligibility for tax benefits, exemptions, and waivers also come into play with mature clients. Division of Assets and Debts in Mature Divorce • On Transmutaion. The general rule in Arizona is that assets and debts acquired during the marriage will be characterized as community property and divided in the divorce. The separate property of one spouse – acquired before the marriage or by gift or inheritance during the marriage – will not be divided. That is, unless the separate property has been partially or fully transmuted into marital property. Transmutation is accomplished by agreement between the spouses, by gift from the owning spouse to the community, or by commingling the separate property with community property so much so that it loses its prior character as separate property. In marriages of long duration, the occurrence of transmutation is more the rule than the exception and it adds another layer of complexity in what may already be a divorce with complex assets and debts. • On Loan Repayment.When a loan was taken against a 401(k), for example, the typical repayment plan might be over a one to five year period. Should the 401(k) loan fall into default before the participant reaches age 59½, the IRS will treat the loan as an early distribution subject to tax and will add a 10% penalty for early withdrawal. How loans against retirement plans should be repaid in a mature divorce can be a sticky issue. • On Home Equity. Deciding which spouse will receive the marital home also takes on greater significance with the mature divorce. The marital home is more likely to represent substantial equity for the couple which, if one spouse remains in the home, means an equalizing payment (or payments) should be made to the other spouse for a reflective share of the equity. • On Reverse Mortgages. When a homeowner has substantial home equity, the property may be used for the Home Equity Conversion Mortgage, or reverse mortgage, when that homeowner reaches age 62. The reverse mortgage gives the senior homeowner an opportunity to convert a portion of the home’s equity into cash while continuing to live there. That the spouse who receives the home will have the option of entering into a reverse mortgage, and the other spouse will not, is an important consideration in a mature divorce. • On QDROs. The community portion of each party’s deferred employment compensation plan in the form of a qualified pension, IRA, 401(k), and the like must also be divided. These often represent substantial assets for mature couples who may already be receiving retirement income. A Qualified Domestic Relations Order (QDRO) is a separate order to the plan administrator establishing the non-employee spouse’s right to receive a specific portion as an alternate payee of the employee participant’s plan. QDROs should be drafted by attorney specialists to ensure proper payment to the alternate payee with the corresponding tax liability. Social Security in Mature Divorce Although Social Security benefits cannot be divided in a divorce, anticipating the benefit amount is necessary to project future income and standard of living. In a mature divorce, calculating Social Security is essential to thorough negotiations over property division and spousal maintenance. • On Marriages of 10 Years Duration. When the client reaches 62 and was divorced from a marriage of 10 years or longer, then he may collect benefits on the former spouse’s Social Security record. (Assuming the client isn’t entitled to a higher benefit based on his own work record and remains unmarried.) When the former spouse is 62 or older and the client hasn’t yet reached full retirement age, then he can receive a derived benefit before the former spouse begins collecting. (Assuming the client was divorced at least two years before collecting.) When the client remarries after the divorce is final, he relinquishes any right to the former spouse’s Social Security benefit and, instead, falls under the current spouse’s benefit. Should the client remarry the same person that he previously divorced, then he is back on track with the current spouse’s Social Security benefits. • On Survivor Benefits. When the former spouse dies, the client may receive survivor benefits – 100% of the former spouse’s benefit – if the marriage lasted 10 years, he is at least 60 (50 if disabled), and is not otherwise entitled to equal or greater benefits. If the client was over 60 and then remarried, he may collect on the deceased former spouse’s work record. If the client is over 60, is collecting under a deceased former spouse, and then later remarries, he continues collecting as a surviving divorced spouse. Insurance Coverage in a Mature Divorce Adults under age 65 don’t yet qualify for Medicare, so obtaining affordable individual health insurance may be challenging. When a party is covered under the former spouse’s employer provided insurance, then COBRA allows the client to continue under that policy for up to 36 months following the divorce. To continue under the former spouse’s insurance, the client is entirely responsible for the COBRA premiums, unless an agreement to the contrary was reached during settlement negotiations. Regardless of seniority, a mature divorce can be as contentious as any. The issues raised here represent only some of the legal concerns raised in a mature divorce. Here at the Law Offices of Scott David Stewart, we take pride in being able to help couples of any age face a divorce with dignity and grace, respectful of the years they have shared together.
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