Divorce is never easy, but it gets significantly harder as you get older. This is the case for gray divorces, or divorces that occur over the age of 50. These divorces give you less time to pay off debts and save for retirement. Women face a higher risk of not having enough money for retirement.
Heading into your future as a single person can be daunting. There is a lot at stake. Here are a dozen mistakes you will want to avoid.
1. Not Knowing Your Assets
Typically, one spouse will know everything about the household assets and debts, while the other does not have a clue. If you fit in the latter category, start getting an inventory of all your bank accounts, investments, retirement accounts, and other assets that can be split in a divorce.
2. Not Knowing Your Debts
Debts are also split up in a divorce. Even though Michigan is an equitable distribution state, you could be on the hook for paying joint credit cards or loans. Get a credit report and avoid surprises.
3. Keeping the House
Many people want to keep the marital home for sentimental reasons. However, houses can be money pits, as you will have to pay for the mortgage, maintenance, insurance, taxes, and more. Can you afford it?
4. Not Understanding Taxes
Almost all the decisions you will make in a divorce will come with tax consequences, from child support to alimony to splitting retirement accounts. Speak with a financial advisor before splitting assets.
5. Rolling Over Your Ex’s Retirement Funds
It’s best to protect the retirement assets in your divorce with a qualified domestic relations order (QDRO). This legal document allows you to make a one-time withdrawal from your ex’s retirement account without paying a 10% penalty.
6. Having No Health Insurance
If you were on your spouse’s plan, then you can say goodbye to your coverage in a divorce. You can stay on your spouse’s plan for 36 months under COBRA, but the cost will be significantly more. It might be better to see what is on your state’s healthcare exchange.
7. Overlooking Your Spouse’s Pension
If your spouse has a pension, you are entitled to a portion of it in the divorce. You can get the present value or a share of a future benefit.
8. Hiding Assets
You may be tempted to hide assets so you get more in your divorce. This is not only immoral but also illegal. Be honest about your assets.
9. Underestimating Your Expenses
In a divorce, one household becomes two. The couple will essentially need double the money to support these households. Be realistic about how much money you will need. It will likely be more than you expect.
10. Treating Your Lawyer as Your Friend
Your lawyer will fight for your legal rights, but at the end of the day, they are a paid professional. Remember that they charge by the hour, so do not use them as a therapist.
11. Not Having a Divorce Team
On the other hand, you do not want to handle your divorce on your own. Make sure you have a lawyer on your side, as well as a financial analyst and maybe even an accountant and therapist.
12. Helping Your Adult Children
This is not the time to be giving out money to your able-bodied adult children. They have a lot of time to work and save up money. You do not. You need to focus on your finances.
Contact Us Today
Gray divorces are on the rise, but dealing with them is not easy. It gets harder as you get older.
Avoid common mistakes with help from The Law Offices of Michael A. Robbins. We have more than 30 years of expertise. Fill out the online form or call (248) 646-7980 to schedule a consultation.