It’s a fact. More than 37% of divorces happen to those 55 and older. I’ve seen it with clients and friends—once the children are grown, many couples realize they have little keeping them together beyond family ties. Divorce is painful and stressful, especially when it comes to finances. However, there are ways to prepare.
Here is a checklist of things to consider.
When contemplating divorce
- If you don’t already have a credit card in your own name, apply for one.
- Consider establishing a credit history in your own name by taking a small bank loan. If necessary, have a friend or relative cosign.
When divorce has been decided upon
- Get a lawyer. If you don’t know any, ask friends or the state bar association for recommendations.
- Close out joint credit and checking accounts.
- Take taxes into account when dividing property. Assets equal in value may not be equal in their tax consequences.
- Be sure your divorce agreement addresses who gets to claim estimated taxes already paid and who pays any additional IRS assessments on joint returns filed in prior years.
After divorce
- Check all insurance policies as well as your IRA and other pension plans, and change coverage and beneficiaries as appropriate.
- Review your will for appropriate revisions. If you’re receiving alimony under a decree prior to 2019, consider an IRA. Taxable alimony is considered compensation for IRA contribution purposes.
- Review your tax withholding and estimated tax payments for any necessary adjustments.
During a divorce, many factors are competing for attention. By knowing the financial issues you will need to deal with beforehand, you may be able to avoid making costly money mistakes. If you have any further questions, contact an Alloy Silverstein advisor today!
