Divorce rates may be falling among the majority of Americans, but the rates for those aged 50 or older have more than doubled. Dubbed “gray divorce,” by some, these later-life divorces put each party’s financial future at risk. In fact, many fall into divorce-induced poverty – a situation in which a financially stable couple becomes impoverished after the effects of divorce. Careful planning, skilled legal assistance, and knowledge on how to protect your financial future in a gray divorce can help you avoid the same fate in your divorce.
Accurately Valuing Your Marital Estate
Your marital estate – the combined assets acquired by you and your spouse during your marriage – is a key component of your financial future. The value of it (along with several other considerations) will determine the settlement that you receive in your divorce. If it is calculated incorrectly, you could stand to lose a significant sum of money.
To prevent this from happening, ensure you have gathered all pertinent documents, such as bank statements, tax paperwork, mortgage statements, and retirement account statements. Also, take photographs of any assets that may not have a financial statement. Submit all of these to your attorney and discuss any concerns over asset hiding or asset depreciation.
Negotiating Your Divorce Settlement
In the state of Illinois, marital estates are equitably split between divorcing parties. Essentially, this means that certain factors – each party’s ability to work, education level, physical health, the duration of the marriage, and others – are used to determine what your share of the marital estate will be. It is important to have all relevant factors considered. Your attorney can help you with this, and they can help negotiate the addition of other assets that can protect your settlement. For example, if you are granted alimony in your divorce, your attorney may be able to help you negotiate the addition of a life insurance policy on your spouse, but under your name. That way, if your spouse dies, you receive the policy benefits to compensate for the loss of alimony payments.
You should also talk frankly with your attorney about the assets that you want out of the divorce. Ask about the tax considerations, the cost of maintenance and upkeep, and use this information to determine whether you should ask for the asset you are wanting or if it should simply be sold and split between you and your spouse. Downsizing, minimizing, or otherwise cutting away the excess could help protect you from divorce-induced poverty.
Planning for the Future
When you know that your life is about to change and that your financial situation is about to undergo a complete overhaul, it can be tempting to start investing to protect your future. However, investing before the divorce is final can actually put you at more risk, should your settlement not be as handsome as you had expected. Instead, wait for the settlement to invest. In the meantime, cover yourself in other ways. Ensure you have health insurance to protect your health, and if you have a retirement account, avoid tapping into it to cover expenses for daily life or the divorce.
At Sullivan Taylor, Gumina & Palmer, P.C., we understand the unique needs and risks for those going through divorce later in life. Committed to your best interest, our Naperville divorce attorneys help protect your financial future and provide compassionate, comprehensive legal services for your divorce. To learn more, schedule your confidential consultation today. Call us at 630-665-7676.