Divorce comes with a lot of territories to navigate at any age, but older divorcees have more pitfalls to avoid. Which landmines must you sidestep as someone divorcing in your golden years?
Kiplinger explains two financial lessons to learn during a gray divorce. Learn how to set yourself up for success as you prepare to retire as a newly divorced person.
1. Review your estate plan
Rather than wait until the ink dries on your divorce settlement to change your estate, make changes now. Learn which changes to make to your retirement accounts, beneficiaries and insurance policies. This may require negotiating with your soon-to-be-ex. Even if you must still wait to make some changes, you could save time by understanding how to make estate plan changes legal. In the meantime, determine if it makes sense to set up a trust or something similar to provide for your minor children.
2. Understand how taxes work when dividing assets
If you know little about 2017’s Tax Cuts and Job Act, you may not realize how it changed alimony payments. Now, divorced spouses who pay alimony cannot claim tax deductions, and spouses who receive alimony no longer pay taxes on payments.
If you pay alimony, consider using a qualified domestic relations order. That way, more assets come from retirement accounts and you need not worry about paying taxes. With this arrangement, the recipient pays taxes.
You deserve to enjoy your retirement and protect your estate after divorce. Getting the facts on the matter sets you up for success in your post-divorce life and twilight years.