According to researchers, the divorce rate among younger adults has leveled off. However, the rate for those 50 and over has doubled and even tripled for those over 65. There may be many reasons why these couples become part of the ‘gray’ divorce statistics, but the task of settling on asset and property division can derail retirement plans for residents in Florida and elsewhere.
Many couples may seek a dissolution once the children are raised and they realize that they no longer have common interests. Unfortunately, the decision to divorce may come at a high price once the division of assets is settled. The hardest area to recover from financially at this stage is in retirement planning. By the time people are in their 50s and beyond, it may be difficult to attain a higher income level or seek a better position in a different company.
One of the first things an individual can do that may prove to be beneficial is to retain the advice of an experienced professional who can help ascertain what one will need in order to retire. Likewise, when it comes to splitting certain retirement accounts, such as a 401(k), it is not a matter of simply writing a check to the former spouse as this can result in severe penalties and taxes. These types of assets require a Qualified Domestic Relations Order, and there are procedures that must be followed in order to split these funds without penalties.
In addition, many spouses may be tempted to surrender their share of certain assets in order to retain ownership of a home. This could prove to be a costly decision in the event one is no longer able to afford the upkeep in the future. A divorce is a difficult undertaking no matter when it occurs, and the prospect of facing a complicated property division settlement may feel like a monumental task. Florida residents may seek the wisdom and guidance of an experienced divorce attorney who can help an individual obtain the optimal settlement for one’s financial needs.
Source: The Washington Post, “A ‘gray divorce’ can devastate your retirement plans. Here’s how.“, Michelle Singletary, March 26, 2018
The end of a marriage brings countless changes. One aspect of life that may be impacted the most by a high asset divorce is one’s finances. Florida residents who are preparing to divorce, may benefit from reviewing how it will affect their future tax filings.
The first major difference when it comes to filing taxes post-divorce is one’s filing status. In general, when one files as a single person, his or her tax rate tends to increase. In order to select the most appropriate filing status, the IRS stipulates that one’s marital status on the last day of the previous year will be applicable to the next tax season. Former spouses may choose to discuss whether the more advantageous Head of Household status would apply to either party. In addition, if the couple have minor children, then they will need to determine which parent will benefit from the credits and tax advantages that are provided under the Internal Revenue Code.
If alimony or child support have been included in the final decree, then it may be beneficial to ensure that these payments are structured carefully in order to have as little impact on taxes as possible. Furthermore, the sale of a home can have a major impact on one’s taxes — especially when it comes to the capital gains taxes and real estate that is located in an affluent area. Time is of the essence in order to take advantage of certain tax exemptions if they are applicable.
Lastly, when retirement and 401(k) accounts are included in a settlement agreement, careful planning can help reduce any tax liabilities. There are certain procedures to follow when splitting these accounts to avoid immediate tax consequences or early-withdrawal penalties. In Florida and across the country, a high asset divorce comes with many financial headaches but careful planning can help alleviate some of the tax burdens. An experienced divorce lawyer can ensure that one’s financial well-being is protected throughout the process.
Source: fool.com, “5 Tax Moves to Make Now If You Just Got (or Are Getting) Divorced“, Dan Caplinger, Accessed on March 19, 2018
Once the “I Do’s” turn to I am done, there are many matters to be addressed. A divorce is an emotionally complicated time, and it may be most helpful to both parties if they can approach it as a business transaction that can be handled as dispassionately as possible. Florida residents who are facing a high asset divorce may benefit from seeking the skilled assistance of a family law attorney.
There are a myriad of concerns when working toward a divorce settlement. Though it may not seem to be a priority, this may be the most opportune time to inquire about refinancing a family home. There are several good reasons to pursue this option, first being to preserve one’s credit. Though many believe that simply removing a name from a title will negate the possibility of one’s credit being blemished, unless the former spouse’s name is also removed from the mortgage loan, then any missed payment can have long-term financial repercussions. A second reason to refinance is to have the resources to buy out the spouse who is giving up his or her interest in the home, if that is the path that the parties agree upon.
In the event that there are debts that need to be paid off, then a refinance to obtain the equity in the house may help one get on firm financial footing. Likewise, having access to an emergency fund may also make a refinance attractive. If the existing mortgage is an adjustable rate mortgage, then converting to a fixed rate or extending out the time for the variable rate to kick in may make monetary sense.
Lastly, the opportunity to lower mortgage payments through a refinance may also be a powerful motivator. A high asset divorce can be a costly undertaking — in many ways — and though it may be an end in some ways, it is also an opportunity to begin again. Florida residents who are in the early part of this process may benefit from the guidance of an attorney who can help fight for a fair financial settlement for the client’s future.
Source: Forbes, “Til The House Do Us Part: The Top Five Reasons To Refinance After Divorce“, Jason Crowley, CFA, CFP, CDFA, Accessed on March 12, 2018
The end of a marriage can often come with serious financial setbacks for one or both parties. If a divorce has a significant impact on a spouse’s financial well-being, then either the spouses or the courts may arrive at an agreement that includes provisions for alimony. Florida has its own laws regarding spousal support and the terms under which it may be awarded.
In Florida, once a settlement has been determined, the courts will look at the division of assets and will then consider whether a spouse will need additional financial support beyond the equitable division agreement. On the other hand, the spouses may be able to reach an agreement on their own concerning the amount, frequency and duration of such support payments. However, if this mutual agreement is not entered into the official divorce record, then it may be difficult and costly to enforce if the paying spouse declines to follow through.
The courts will take various factors into consideration when determining whether spousal support is warranted, including the duration of the marriage, the financial standing and earning capacity of the parties, the time needed for education or training, and the physical and emotional condition of the the spouses. In addition, there are several types of alimony that can be granted depending upon each unique set of circumstances. Furthermore, these support payments are made through the state’s payment disbursement system in order to reduce the need for physical contact after a divorce is obtained.
Alimony payments can be ordered for a short duration or until the recipient remarries or dies. It can also be paid in a lump sum or over a set schedule. Each situation requires an individual approach. Florida residents who are seeking a divorce may wish to discuss this and other issues related to any settlement agreements with an experienced attorney.
Source: FindLaw, “Florida Spousal Support or Alimony Laws“, Accessed on March 5, 2018