Divorce can be a menacing word, even when separation is the only acceptable option for one or both partners. It may be widely known that going through this process can take an emotional and financial toll, but many older couples aren’t fully prepared for the ramifications of divorce later in life. Texas couples considering an official end to their marriage should take the time to learn how to prepare and protect themselves throughout the process.
Gray divorce, a term that applies to separating partners over the age of 50, has been steadily rising since the 1990s. Divorces for people in this age bracket tend to come with a few complications that aren’t as pivotal for younger spouses, particularly issues related to insurance policies and retirement plans. Some types of policies and beneficiaries can’t be adjusted until after a divorce is finalized, which could leave children or other family members without financial protection until the proceedings are over.
Recent changes to divorce tax law brought by the 2017 Tax Cuts and Job Act (TCJA) also marks a major change in the cost and value of alimony payments in negotiations. Couples who divorce during or after 2019 are subject to the new rules, which requires the alimony payer to shoulder the tax burden for the payment. This is a reversal of the previous rules, which allowed payers to deduct alimony payments on their taxes.
The steady rise in gray divorce rates and the increasingly-complex financial instruments associated with pensions and retirement benefits has changed the way couples need to approach the process. It can be difficult enough to simply manage conflicted emotions during this stressful time, even with divorce mediation, but it’s absolutely essential to also seek reliable professional advice on how to handle financial issues stemming from the end of a marriage.