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Later-in-Life Divorce in New York Can Endanger Retirement

The recent breakups of long-time married couples Maria Shriver and Arnold Schwarzenegger and Al and Tipper Gore show that even long-term divorces can have painful breakups.

Divorce in Great Neck remains a difficult decision, as many spouses, after months or even decades of marriage, decide to split up. For those who are deep-rooted in their marriages to those who realize quickly they have made a major mistake, divorce can still be painful.The Wall Street Journal recently provided some tips to those who, later in life, have broken up and are preparing for divorce. For the younger couple, this advice isn’t quite as useful, as they likely don’t have years of built-up equity in a house, children to provide college money for, retirement plans and even a family business with which to deal.

The division of assets can be particularly difficult and contentious because each side feels responsible for accruing the assets — whether a house, money, built-up savings accounts or investments.

“As years go by and they get close to retirement age, where they have to be near one another more, one of them realizes they don’t want to live the rest of their life in this manner,” said a divorce lawyer who has seen an increase in older divorcees.

One of the bigger issues of divorcing late in life and after years of marriage is the inability or tough position of finding work to recoup lost money and a new lifestyle. The earning capacity of someone in their 60s can be much different than someone in their 30s.

Below are some key assets that a long-married couple may have to split upon divorce and how best to handle:

The house: At one time, couples wrestled over who got to keep the house because it was a good investment and could end up being profitable for whichever spouse got to stay. Now it’s an albatross, the news article states, because of upside down values, the possibility of a long stay on the market and its ongoing expenses.

A retirement plan: Besides a house, the biggest asset for many couples is the retirement plan. Retirement accounts, 401(k) accounts and pensions are usually established in one person’s name, but could be considered marital property if the money was earned while the couple was married. New York is one of 41 “equitable distribution” states, where spouses have a right to claim a portion. Specifying the specific retirement plan in a qualified domestic relations order is important.

The family business: Many couples have worked years to build up a small business. But a divorce can not only rip apart the family, but also the business.
Perhaps a “post-nuptial” agreement should be considered to spell out what happens to the business in death or divorce. While these agreements can be tough to discuss, they are recognized in most states and are essential to protecting the business.

The Law Offices of Ira S. Newman provides family law counsel in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or contact us through the website.

More Blog Entries:

New York Divorce Filings Rise With Option of No-Fault Separations: July 29, 2011
New York Child Custody Turning Toward Shared Parenting Agreements: July 23, 2011
Additional Resources:

The ‘Splitting’ Headaches of Late-Life Divorce, by Kelly Greene, The Wall Street Journal