Articles Tagged with Divorce

Many Texans plan for the future, including planning their estates with their spouse. Married couples may find it easier to plan together, or may enjoy picturing their life together years, maybe even decades, down the road. But, unfortunately, not every marriage survives until the end of time. Texans may find themselves in the particularly difficult situation of getting a divorce. For many, besides the emotional toll the divorce can take, there are many questions about long-term financial future and estates. What happens to the life and plans that the couple once built together? How can Texans proceed? Read on to learn about why estate planning is a critical component of the divorce process.

Estate Planning Considerations During Divorce

These questions can become increasingly complicated. When two spouses both own property or a house together, who gets to keep it? What becomes the legal status upon divorce? How can the property be divided up legally and fairly? As one can imagine, the titling of the family residence(s) can become a major legal conundrum for divorcing couples, especially those who try to handle their own divorce. But that’s not the only confusing title—other assets, such as bank accounts, also need to be reviewed and sorted out to ensure the split is clean and fair.

9.9.19It used to be unheard of, a divorce after fifty, sixty or even seventy years old. However,  gray divorce is now becoming more common. There are pitfalls to be aware of, before taking this big step.

According to the National Center for Health Statistics and the U.S. Census Bureau, younger Americans are divorcing at much lower rates, while divorces for adults over 50 have just about doubled since the 1990s. Back in the 90s, for every 1,000 persons age 50 and older, only five divorced. In 2015, for every 1,000 married persons age 50 and older, 10 are divorced.

The issues of a gray divorce are very different than those of a younger couple, not to mention the financial and legal complexities of marriages that span decades.

by Leonard M. Roth, Board Certified Family Law Specialist

8.4.16Unfortunately, divorce is a life-changing event for married couples of all ages. My grandparents divorced after 65 years of marriage. There are critical factors to consider when divorce happens in your older years.

Texas is one of nine community property states. Property acquired from work during marriage is considered to be shared equally by both spouses. Marriage is a sharing event, and neither spouse has a greater right to the community property than the other spouse, until a court is asked to divide the community estate on divorce. In most marriages, there is a separate property estate that must be confirmed, but not divided, by the court, and a community property estate that must be divided by the court.

Divided wedding cake topperOnce the initial emotional trauma is past and the couple starts working towards creating separation agreements, it's time to consider the day-to-day costs of living that change as the result of a divorce. The family economic unit that formerly had one mortgage or rent payment, one cable bill, one energy bill, etc., now has two of each of these bills. Wise planning for life after divorce includes living expenses, taxes and retirement planning.

Money's recent article, "Keep a Divorce From Killing Your Finances," offers several important tips for those going through or recently completing the divorce process.

Monitor assets in your divorce settlement: If you're in the midst of a divorce, examine the type of assets that you receive as part of your divorce property settlement. The reason for this is your cash flow. Even in cases where the math demonstrates an equal split between the two parties, one spouse could get stuck with a non-liquid asset, which might end up being difficult to liquidate if cash flow becomes a problem.

Divided wedding cake topperOnce you're divorced you should immediately create a new estate plan — a will or revocable living trust, a healthcare power of attorney, and a living will ("pull the plug") designee. Read on for more estate planning must-do’s regarding divorce.

A recent article in the The Huffington Post, titled “Divorce and Money,”says that you should always listen to your attorney about the applicable laws in your state regarding divorce and your estate. In addition, the article says that you should also look at the following issues.

The division of property in a divorce is typically not taxable to either party. However, if instead of dividing marital property, one spouse agrees to monthly maintenance (alimony), this will be taxed as ordinary income. And it’s deductible to the paying spouse. The original article also notes that the spouse receiving the maintenance checks must make a quarterly estimated federal and state tax payment, so you need to plan accordingly.

Divided wedding cake topperFailure to do so — or to alert all relevant parties to the changes — could result in certain assets and benefits unintentionally going to your former spouse or his or her family upon your death.

A MarketWatch article, titled Just divorced? Don’t forget to separate your estate plans, shares a true life story of why we all need to pay close attention to our estate plans after a divorce.

Robyn Lewis executed a will in 1996 that named her then-husband to receive her property after her death. The property included the house—a home that had been in her family for generations. In her will she designated her then-father-in-law as the secondary beneficiary. Robyn ended up divorcing her husband, but no record was found of a change in her secondary beneficiary after the divorce.

Bigstock-Family-Couple-Relationships-Cr-5604405"There are no 'do-overs' after you agree to a settlement," says Vickie Adams, a certified financial planner and certified divorce finance analyst in San Pedro, Calif. "After 50, you'll have fewer years to recoup from financial errors, so it's essential to get this right." Here are a few tips for protecting your finances during a later-in-life divorce.

Unfortunately, divorce is possible at any age. But there are differences in financial tactics depending on your stage of life, particularly for divorce after age 50. A recent article in USA Today, titled "Protect finances in later-in-life divorce," provides some tips for protecting your finances during a later-in-life divorce.

Use a third party mediator. Although some couples can sort things out on their own, many others use an impartial third party to help with the process. The original article says that couples heading into a divorce who choose to litigate should give their attorneys permission to contact their accountant, estate planning attorney, and financial adviser.

Divided wedding cake topperA scenario commonly encountered within estate planning is when an individual dies while negotiating a separation agreement with their spouse, or when in the midst of divorce proceedings.  While a divorce order will void specific bequests to a spouse, merely initiating negotiations or proceedings will not.

Married couples typically plan to leave significant portions of their estates to the surviving spouse. If a divorce were to occur, a change would need to be made to the estate plan to remove the ex-spouse. Most of the time, if you do not change your estate plan after getting a divorce, a judge will ordinarily disregard any specific bequests you made to your ex-spouse. The law assumes you would not want your estate to go to a former spouse.

However, as the Wills, Trusts & Estates Prof Blog points out in a recent article titled When Death Occurs Mid-Divorce,the same thing is not true if you are in the divorce process but your divorce has not yet been finalized. This is a common problem when a divorce has been filed and one of the parties passes away during the process. When that happens, it can cause issues with a family home that is owned by both parties. If the home is owned as joint tenants, then the property will automatically pass to the survivor. If the divorcing couple owns the home as tenants in common, however, the deceased party’s share of the home will go to his or her heirs.

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