Seder & Chandler, LLP
Worcester 508-471-3018
Westborough 508-709-0024

Tips for dividing marital assets in a gray divorce

Are there different financial considerations for a divorce when a person is over the age of 50? Our family law firm would agree.

First, the proximity of retirement in so-called “gray divorces” requires some careful planning. In any divorce, there is a chance that expenses will double while household income will be cut in half. Yet since individuals in gray divorces have fewer working years left before retiring, an attorney might advise that any property division negotiations prioritize liquidity.

In a gray divorce, it is important to consider how property division negotiations will impact one’s retirement planning. For example, trading one’s share of securities or retirement accounts in exchange for the family home may be equal in terms of fair market value, but hidden costs may actually make the exchange unequal. Home ownership involves paying property takes and paying for repairs, for example.

Although real estate may appreciate, that value is unrealized until the home is sold. An individual’s cash flow may be too low to sustain living in the family home. Of course, the value of assets in IRAs or 401(k)s is also unrealized because those accounts are set up to be available upon reaching retirement age. Early withdrawals could result in steep penalties. Splitting a taxable brokerage account may also trigger capital gains tax.

Our family law firm helps individuals to plan for the bigger financial picture after a divorce. We start by taking a financial inventory of the marital estate, searching for all assets and debts that must be disclosed. Our search may uncover frequently overlooked assets, such as 401(k) accounts from an old employer, or separate bank accounts. We will also compare a spouse’s disclosures against the schedules of the couple's income tax return.

Source: U.S. News, “Gray Divorce: What Women Who Divorce Later in Life Need to Know,” Debbie Carlson, July 21, 2016

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Worcester, MA 01608

Phone: 508-471-3018
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Westborough, MA 01581

Phone: 508-709-0024
Westborough Law Office