According to the Pew Research Center, the divorce rate for older couples in Texas and the rest of the United States is twice what it was in the 1990s. People who are older than 50 years old and who want to get a divorce should be aware of how to properly divide their assets, particularly retirement assets. Dividing certain assets in the wrong manner can result in unexpected tax bills and other types of financial hits. Because older couples are close to retirement, it is especially important that they avoid these types of financial mistakes during their divorce.
A qualified domestic relations order is needed to divide pensions and 401(k) plans. A QDRO, which is a legal order, details the right of a divorcing spouse to obtain part of all of the accountholder’s qualified plan. After the legal order is given to the administrator of the plan, the portion of the funds the QDRO stipulates is for the divorcing spouse is transferred.
It is also important to be aware that employers have different guidelines regarding whether or how employer pensions can be divided. It will be necessary to use the services of a professional to ascertain the value of employer pensions, which can take up to three months to complete. Individuals who have employer pensions should not establish any terms for dividing the pensions until they have the valuation information.
The division of IRAs is to be detailed in a separation agreement or divorce decree. Once the agreement is complete, it will have to be given to the IRA custodian.
A divorce attorney may assist clients with ensuring that their assets, including financial assets like retirement funds, are fairly divided during a divorce. Litigation may be used to enforce the equitable division of financial assets that were accumulated during the marriage.