For older divorcing couples in Michigan, needs are often different. Children are usually grown, so child custody isn’t usually necessary. Also, so-called “gray divorces” are often less contentious. Some long-term partners simply drift apart. And with divorce rates among adults 50 and over having doubled since the 1990s, there are more older couples dealing with the challenge of dividing assets and protecting retirement savings during a divorce.
Older separating couples are also more likely to have a high asset divorce. Situations like this often involve multiple (401)K plans, IRAs, and pensions. There are certain rules that have to be followed with how such assets are split, which can make it difficult to simply do a 50-50 division. With 401(K)s, some partners overlook the fact that contributions may have come from mutual income. If this is the case, the other party is entitled to part of those assets.
In order to transfer pension and 401(K) funds to a former partner, a qualified domestic relations order (QDRO) must be presented to plan administrators. If one party withdrawals cash from a 401(K) account, taxes will be owed. However, the standard penalty won’t apply. But if funds are rolled over into a new IRA, there won’t be any taxes or penalties. IRAs are divided based on what’s stipulated in a divorce decree or separation agreement. Roth IRAs are often split evenly since they are funded with after-tax contributions.
A family law attorney might be able to offer advice on other issues with marital property and asset division. Since assets are often divided as per each party’s financial needs, an attorney might request division in a way that allows one party to have more funds to purchase a new home while the other former partner has a more secure retirement plan. A lawyer may also seek monthly support payments for a lower-earning client from the higher earner for a certain period of time.