Financial Security and Late-in-Life Divorce




A growing number of people are divorcing or separating later in life; dividing a lifetime of accumulated assets can seem like a daunting task, but you have every right to fight to retain all you are entitled to.  For late-life divorcées, the split tends to be the largest financial transaction of their lives with the gravest financial consequences. Given the profound effect your judgment will have on the remainder of your golden years, it’s imperative to protect your financial security throughout and after the divorce process. Given the wide span of ‘divisible assets’ present in a late-life divorce, there is a lot to both consider and be wary of moving forward. There are savings, investment, brokerage, and retirement accounts, real estate, in some cases business assets to examine. An estate plan must be updated, health and other insurance replaced, power of attorney modified, etc., all which require additional planning and due diligence. As part of the process, you may need to hire professional evaluators, actuaries, forensic accounts, and the like. When thousands are at stake, it is worth the extra cost to get the correct value of a significant asset. The bottom line: be prepared, be thorough, and don’t settle for less than your half. By choosing the Law Office of Channe G. Coles, you will have guidance throughout the process and all of your questions will be answered.



Identify your entire community property estate.

Before you can begin to divide your marital property, you need to know what, where, and how much. In taking inventory of your property, consider pension plans, the value of a family business, insurance policies, and valuable personal property such as antiques and collectibles. It is recommended that you collect tax returns, pay stubs, property deeds, vehicle registrations, insurance policies, and account statements, as well as any other documents that may pertain to your separation. To quantify liabilities, collect credit-card statements and loan documents, plus order a free credit report.



Dividing your combined retirement savings:

Dividing 401(k)s and defined-benefit pension plans can be more complex than transferring or dividing a traditional or a Roth IRA and usually require a qualified domestic relations order, “QDRO”. Dividing up stock options or deferred-benefit plans can be may require the services of a forensic accountant.


Keeping or selling the marital residence.

Some say it’s a mistake to keep the marital residence, especially if you give up other assets in exchange for the house (such as liquid assets and/or a pension that could provide lifetime income). Maintaining a large home can be expensive. It is important to consider the ‘operating expenses’ over the rest of your lifetime, to determine whether you will actually ‘need’ the space and headache of maintaining a large home. Consulting with a tax or real estate attorney may provide additional information regarding delaying the sell of your home and potential benefits (or risks) it may bring.


Changing your estate plan.

When you can update or revoke an estate plan depends entirely on where you are in the divorce process.  Pre-filing: If you are contemplating divorce, haven't filed yet, and have estate planning documents in place with your current spouse, you may consider revoking and restating all of the estate planning documents prior to filing for divorce. In California, the spouse who is contemplating divorce is not mandated to notify his/her spouse of any changes with the estate planning documents, life insurance beneficiary designations or retirement account beneficiary designations. If you choose not to revoke these documents, you should at least consider updating your will, financial power of attorney, and medical directive.  Post-filing but before judgment: The Standard Family Law Restraining Orders which go into effect once you file for divorce do not permit the revocation of a trust, the changing of life insurance beneficiaries, or the changing of other “non-probate” transfers, retirement plan beneficiaries, pension plans, employee benefit plans, and individual retirement accounts. The intent of the restraining orders is to maintain the status quo of assets and ownership interests until the division of assets is complete.  If you have already filed for divorce and are anticipating a lengthy divorce proceeding, you should update your will, financial power of attorney, and medical directive, at the very least.  Recently divorced: Once you are divorced, then you are considered “single” again. The dispositive provisions are no different from any other single person who has never been married or who may be widowed. If you are recently divorced, then you should immediately update any life insurance beneficiary designation and update your retirement plan beneficiary designation. If you have a minor child who is designated as a beneficiary, the minor’s legal guardian (possibly your surviving ex-spouse) will take over the assets on behalf of the child, unless there is a “Guardian of the Estate” designation so that the retirement plan administrator has the proper designee. You will also want to update the Trustee nominations of any living trust. It is very important to carefully draft the removal of the Trustee provisions so that the surviving parent is not empowered to file on behalf of the minor and petition to have your client’s designated Trustee removed.


Social Security Benefits:

Haven’t yet filed for Social Security? Create a personalized strategy to maximize your lifetime income from Social Security. If you have been married for ten years or more, know your spousal rights to receive benefits under your ex-spouse’s record.



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Legal disclaimer: The information provided in this article is not intended to create, nor does it create an attorney-client relationship. The information herein is not intended to be anything other than the educated opinion of the author. This article should not be relied upon as legal advice. Attorney is licensed to practice law only in the State of California, and the information provided is based solely on California Law unless otherwise stated.


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Legal Disclaimer: The information provided on this site is not intended to create, nor does it create an attorney-client relationship. The information herein is not intended to be anything other than the educated opinion of the author. This article should not be relied upon as legal advice. Author is an attorney is licensed to practice law only in the State of California, and the information provided is based solely on California Law unless otherwise stated.