5 Strategies for Divorcing After 50 and How To Protect Your Finances

As divorces among couples over 50 become increasingly common, it’s essential to navigate this process with caution, especially from a conservative standpoint. While divorce rates have declined for younger adults, they have doubled for those over 50 between 1990 and 2010, with 36% of all divorces in 2019 occurring in this age group.

Divorcing after 50 poses unique financial challenges, particularly as many couples have accumulated intertwined finances and assets over the years. Moreover, divorce can disrupt retirement plans, which are crucial for individuals approaching this milestone age.

1. Retain Competent Legal and Financial Counsel: Securing the services of a capable divorce attorney and financial advisor is paramount. Your attorney should prioritize asset protection while exploring mediation or collaborative divorce options for a smoother process. Collaborating with a financial planner can offer insights into post-divorce financial stability, aiding in the creation of a robust financial plan.
   
2. Catalog Assets and Debts: Collaborate with your attorney to compile a comprehensive inventory of joint and individual assets and debts. This includes documentation of loans, credit card statements, tax returns, and nonmarital assets such as inheritances or pre-marital property.
   
3. Establish Individual Financial Accounts: Open individual accounts if you haven’t already to establish independent credit history. Consider closing or freezing joint accounts to prevent financial complications during the divorce proceedings.
   
4. Review and Update Legal Documents: Amend legal documents such as your will, healthcare proxy, power of attorney, and retirement account beneficiaries to reflect your post-divorce wishes. Updating these documents ensures that your former spouse is appropriately excluded from any roles or benefits.
   
5. Understand State Laws on Asset Division: Familiarize yourself with your state’s laws governing asset distribution. Community property states divide marital assets equally, while equitable distribution states allocate assets based on fairness and individual circumstances. Retirement accounts, even if held in one spouse’s name, may be subject to division, potentially impacting planned retirement savings.

Navigating the division of retirement assets, such as 401(k)s and IRAs, requires careful consideration. Opting for percentage-based distributions over fixed dollar amounts accommodates market fluctuations and ensures a fair division reflective of the account’s value at the time of division. Tools like Qualified Domestic Relations Orders (QDROs) facilitate efficient asset transfers while minimizing tax implications.

By adhering to these conservative principles and seeking informed counsel, individuals can mitigate the financial and emotional toll of divorce after 50, safeguarding their assets and securing their financial future.