Getting a divorce while you’re in your 50s or older can be particularly challenging when it comes to your finances. You’ll need to know about alimony taxation and updating your estate. If you’re an Ohio resident, here are some important things to consider as you plan for your divorce.
Getting through a gray divorce
Usually, divorcing individuals consult with their lawyers to tell them how to efficiently divide their assets and keep the process from being too lengthy. It may be helpful to have a financial advisor on hand as well. Financial advisors are beneficial for people in any age group but can be especially helpful for older individuals who are getting a divorce and have more to lose financially.
Tax laws and asset division
The 2017 Tax Cuts and Job Act brought about some significant changes concerning alimony payment taxation. Previous laws indicated that alimony was taxed for the spouse receiving alimony and tax-deductible for the spouse paying the alimony. The new law, however, reversed this structure. If you’re getting a divorce after Dec. 31, 2018, you won’t get a tax reduction if you’re paying alimony, and you won’t have to pay taxes on the alimony you receive.
Making adjustments to your estate plan
Most of the time, you’ll need to make changes to your estate plan when you get a divorce. However, you’ll need to be aware of the timing when it comes to estate changes. For instance, only a spouse can be a pension beneficiary, which means a divorcing parent cannot name their child as a beneficiary on their pension until the divorce is final.
A child can be a beneficiary on an investment account or life insurance policy, but most states require a spouse to grant permission for another beneficiary to be named in a retirement account. Most spouses are not likely to agree to this during a divorce. These are just some of the many issues to consider when divorcing at an older age.