Divorce is not always an easy process, but when a couple gets divorced later in life, after accumulating many assets, the process may become quite complicated. Texas is a community property state, and couples may want to work out a plan of action for the division of marital assets, rather than having the court make those decisions. As soon as it becomes apparent that a divorce may be imminent, estate plans should be amended, because, if one spouse should die during the divorce process — but before it is finalized — his or her assets would not be protected. Beneficiaries and powers of attorney may need revision.
It may be a good idea to be proactive and gather a team of advisors to assist throughout the process. A proper assessment of all assets is necessary, not omitting items such as a spouse’s pension plan from years ago, capital-loss carryforwards and tax refunds that may be due. Another matter to address is retirement benefits. While IRA assets can be split, some benefits may not be, in which case the spouse must ensure he or she receives alternative property.
While female spouses often give up other assets in order to keep the family residence, it needs careful consideration. Owning a home can be financially taxing. One option is for the spouses to co-own the home for some time after the divorce. One should study all insurance policies for benefits that he or she may still be eligible for, and make sure they are properly covered by acquiring the necessary insurance policies. Not only health care insurance should be examined, but also long-term care insurance, which offers better prices for couples, making it beneficial to purchase before the divorce is finalized.
Challenges may certainly accompany a divorce, and losing the safety net of a spouse’s income is only one of them. Texas individuals may find the complexities of the division of marital assets intimidating, but by surrounding themselves with an experienced team of advisors, their assets may be properly protected. After careful planning, each party may be able to embrace a single life filled with exciting new challenges.
Source: NASDAQ, “Keep an Eye on Finances During a Divorce”, Kiplinger, May 23, 2014