Whether you’ve been married for five years or fifty years, deciding whether to divorce may be the most important decision of your life. Regardless of your age, you will need to navigate a number of emotional, financial and legal obstacles.
However, if you are an older adult, you may face some particularly significant issues. You are more likely to have assets (including a pension), a fixed income, and limited opportunities to increase your financial assets. Health insurance and social security benefits may also be important concerns. If you are considering divorce later in life, speak to a lawyer about steps you can take to protect your rights.
For many families, a pension is the largest asset after the family home. Retirement benefits accumulated during the marriage are subject to division in a divorce. Retirement benefits that were earned before the marriage or that will be earned after the marriage are not subject to division.
Many divorcing spouses agree to divide the pension between them. If you cannot agree on how to divide the pension, the court will step in. Many courts prefer to give full rights to a pension to the party who earned it, as long as the other party will have a sufficient amount of income and property from other sources. However, the court is likely to divide rights to the pension if it is one spouse’s primary source of income, even if he or she did not earn it. The court can divide the pension between the spouses by percentage―for example, 60 percent for one spouse and 40 percent for the other―or by giving a fixed cash amount to one spouse with the remainder going to the other spouse.
Federal law regulates the division of pensions. Specifically, the law allows a court to make orders called qualified domestic relations orders (QDROs). These orders require the administrator of a pension plan to send pension checks not only to the worker, but also to the worker’s former spouse. Most plans by private employers honor QDRO’s but some military and governmental plans allow for marital division of retirement benefits under different rules and procedures. To find out how marital distribution is available under your or your spouses’ plan, contact the plan administrator.
Although Social Security retirement benefits are not property and are not subject to division in a divorce, they are income and deserve consideration when a couple divorces. If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse’s Social Security record if you are:
- at least age 62,
- not entitled to other benefits―for example, retirement or disability benefits―that exceed one-half the wage earner’s primary benefit amount, and
- your former spouse is entitled to or receiving benefits.
Because the age at which you or your former spouse retires can have a significant impact on your social security benefits, you may want to try to reach an agreement about the age at which one or both of you can retire. For example, although retirement benefits are available at age 62, the amount received at this age will be less than that payable at full retirement age. To find your full retirement age, visit www.ssa.gov/retirechartred.htm.
Health Care Planning
When going through a divorce, it is important to address health care planning―health insurance and medical bills may be among your most significant expenses. When a couple divorces, the family health insurance policy, if any, will no longer cover both spouses. The policy will only cover the spouse who purchased the policy or who acquired the insurance through work. Children covered under a family policy generally will still be covered after a divorce.
However, a federal law passed in 1986―the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA―requires most employer-sponsored group health plans to offer divorced spouses of covered workers continued coverage at group rates for eighteen months after a divorce, and up to thirty-six months in some circumstances. The worker’s divorced spouse must pay for the coverage. If you wish to take advantage of COBRA, you should act as soon as the divorce is final. You should contact the human resources or personnel department of the covered worker’s employer to learn what steps you must take. Generally, you must act within sixty days after the divorce decree becomes final; continued coverage is not automatic.
Other Steps to Take
Often people are so caught up in the process of divorce that they forget about other aspects of health care and financial planning, including wills, trusts, powers of attorney, and health care advance directives.
It is crucial to revise these documents if you get divorced. In particular, you should be sure to change your will, any trusts that designate your former spouse as a beneficiary or trustee, health care planning documents, and life insurance policies that name your former spouse as a beneficiary. If you have a lawyer assisting you with your divorce, he or she may be able to help you do this.