June 30, 2020

Financial Considerations in a Gray Divorce

Since the 1990’s, statistics show that the rate of gray divorce within the United States has more than doubled.  If you are unaware of what a gray divorce is, it is one between a couple who is in their 50’s or older.  These divorces often carry many more possible financial consequences that does a divorce between a younger couple who have not has a much time to build retirement or other accounts.

Retirement is one of the most important consideration in a gray divorce.  For spouses who are already drawing retirement, or are close to reaching retirement age, there is not time left to build up enough funds to live off of again should they lose that retirement in a divorce. This is why it is important to retain the services of an attorney who is experienced in handling Michigan divorces that address such matters.

Michigan law requires that a document called a Qualified Domestic Relations Order be filed in any divorce in which retirement funds are at stake.  This will be the legal document, issued by the court, that will instruct the administrators of a retirement on who to disburse funds to post divorce.  It is very important that this form be completed fully and correctly.  Therefore, it is highly advised that it be done by an expert.

A Judge will consider factors within a gray divorce such as the comparability of the amount of retirement each spouse is receiving or will receive, as well as the financial contributions each made to the marriage throughout the years.  There are also specific rules developed by the IRS to prevent parties from being penalized fore retirement disbursements.  These are all complex matters that should never be attempted to navigate alone.  Doing so could result in irreparable financial consequences.