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Some important things to keep in mind during later-life divorce

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For Texas residents who are approaching retirement, a divorce can be difficult and involve the division of substantial marital assets. Those who are going through a later-life divorce like this should keep a few things in mind during the asset division process.

The general rule for property division in a divorce is that any marital property is split equally. Marital property, which in Texas is considered community property, is usually defined as any property obtained during the marriage. When divorcing, spouses often make several mistakes that could be harmful in their post-divorce financial lives. Keeping the house may seem like a good idea, but it brings with it high maintenance costs and uncertain future value. When splitting up retirement accounts, it is best to take a Roth IRA over a traditional IRA because the taxes have already been paid. Also, avoiding or minimizing any pre-retirement distributions can allow the spouse to avoid early distribution penalties. In many cases, up to half of a person's Social Security benefits may also be available to a former spouse, even if that ex-spouse has remarried.

These things are important to keep in mind as the divorce rate for Americans over 50 years old continues to rise. Statistics show that the rate of over-50 couples splitting up has doubled in the two decades between 1990 and 2010. Older couples generally have more significant assets than their younger counterparts, potentially leading to more difficult property division issues during the divorce.

When the couple's assets present a complex property division situation, an attorney may be able to help. The attorney may be able to assist in the valuation of the couple's assets and help negotiate a settlement between the spouses that is fair to both parties.

Source: Forbes, "The Big Money Mistake Divorcing Women Make", Kerry Hannon, July 03, 2014

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