For various reasons, many Baby Boomers seem to be facing divorces even after long marriages. Sometimes both parties reach the point where they want to end their marriage. Other times, it's one spouse or the other who takes the lead in deciding to divorce. Even if just one spouse wants the divorce, in Texas the divorce will ultimately be granted if that spouse persists.
Whether divorce represents welcome relief or a distasteful experience that can't be avoided, both parties need to prepare. The following is a list of financial issues that come up in most divorces after long-term or later-in-life marriages.
1. Planning for Retirement. While not everyone has a retirement plan or assets set aside for retirement, it should be a concern for everyone over 40. The degree of urgency may vary, depending on how far away from retirement each party is. The tax aspects must also be considered for each type of asset. Preparing a future budget and working with a financial advisor will be helpful.
2. Planning for Transition. This is the transition from being married to single and also may include the transition from working to retirement. Very often, one spouse has stayed home to take care of children. That spouse may need some time to get back in the job market and get hired, and may need some education. Our economy is not yet back to full speed, so finding a job is not as simple as it was a few years ago. That means that support may need to be a component of the settlement.
3. Dealing with Health Issues. Being part of an older age group naturally means that there will be health concerns. Additionally, health insurance will have to be provided for. Health issues can affect whether one or both spouses are able to be employed.
4. Making Living Arrangements. The divorce may be coming at a time when the parties might have been downsizing anyway, but selling a house is often part of the discussion. One or both parties may have to find suitable and affordable housing.
5. Taking Care of Children. Depending on the children's ages, there may be private school, tutors, college or other education-related expenses. Then there's extra-curricular activities. They have to be coordinated and paid for. If the children are young, child support and visitation will have to be resolved.
6. Separating Credit. Often, one spouse has a better credit record or more income and the credit purchases have been made primarily in that spouse's name. Joint credit cards need to be separated. Some debts might be paid off, or they may be allocated in the property division. A spouse might need to set up some new separate credit cards or accounts while they are still married and there is joint credit to qualify for the accounts.
7. Managing Debt. The parties both need to prepare budgets for the interim while they get divorced and for their post-divorce lives. Splitting debt 50-50 doesn't make sense if one person has very little earning potential and the other one has high earnings. The parties need to be realistic.
8. Allocating Investments. Each party will probably want or need some investments, if there are some. They should carefully evaluate the level of risk with each investment. The parties also need to consider whether the investments promise short-term income or long-term value, and try to fit the investments with each party's needs. Another factor to consider is how capable each party is to manage the assets.
9. Updating Financial Planning. Everyone should have a will and the wills have to be revised after divorce. Other instruments, such as trusts, insurance, retirement assets, stocks and bonds, real estate and other investments will need to be revised or reconsidered. You should work with a financial planner who helps people going through divorces.
10. Providing for Legal Fees. Since you will be going through a divorce, you will need a divorce lawyer. Unfortunately, sometimes one party will try to prevent their spouse from hiring a lawyer. Even in the most agreeable divorces, each side should have their own attorney to review the situation and advise the client. One way or another, there's usually money available in assets, bank accounts or credit cards that can be used to hire an attorney. Don't let your spouse talk you out of it.
Most people do a little research and think about the issues before they go see a lawyer about a divorce. This list will give you a starting point. There are probably some issues not covered that may come up in your case. Be prepared to discuss these and other issues with your lawyer at your first meeting. Good luck!