Older couples in California who decide to go their separate ways are part of trend that has seen the rate of gray divorces, or divorces of adults who are over 50 years old, double what it was in the 1990s. It is important that both parties in older couples are aware of how to divide their retirement plans and other types of assets properly. If certain retirement assets are not divided properly, individuals may end up with a steep tax bill or some other unexpected financial hit.
Older couples with high incomes may find that they have more complicated financial situations than those of younger couples. In some cases, both parties may have multiple pensions, IRAs and 401(k)s, which can be difficult to divide equally. Annuities may also present complications as the terms of annuity contract can differ, and it may be necessary to sacrifice other assets in order to avoid cashing an annuity and reducing its value significantly.
In order to divide 401(k) plans and pensions, it will be necessary to obtain a qualified domestic relations order. A QDRO is a legal order that identifies the right of a divorcing spouse to obtain a portion or all of the account holder’s qualified plan. After the QDRO is given to the plan administrator, the stipulated amount can be transferred to the divorcing spouse.
A divorce attorney may advise older clients about which legal avenues should be pursued to obtain favorable divorce settlement terms regarding the division of assets, including retirement plans, pensions, business assets, community property, stock options and other financial assets. The attorney may engage in litigation to ensure that all assets hidden by the other party in the divorce are accounted for and are divided equitably.