Economic Effects of Divorce

 Posted on April 11, 2016 in Divorce

The poverty rate among unmarried women over 50 is nearly three times higher than the rate for divorced men over 50, according to a recent study.

To explain the discrepancy, researchers pointed to Social Security laws. When the Social Security Act was passed in the 1930s, most eligible persons were married, and so women who had been absent from the workforce for a number of years could rely on a spouse's Social Security benefit. But as the divorce rate in this age bracket has increased significantly in recent years, that reliance is no longer possible in many cases.

In 1980, one in five midlife adults were unmarried; today, that proportion is one in three.

Preserving Income Following a High-Asset Divorce

A later-in-life high net worth divorce is nearly always a shock, in more ways than one. Emotionally, many older children find it more difficult to adjust than minor children, because it can be very upsetting to end decades-old family traditions and replace what should be joyous occasions, like weddings and graduations, with a veritable hide-and-seek game of keeping Mom and Dad apart.

Financially, an economic partnership that has been in place for years or decades comes to a sudden halt. For example, many spouses depend on the other spouse for health insurance, and divorce ends a non-employee spouse's eligibility for a group health plan. So, the spouse must make alternative arrangements, which can be difficult if the spouse has health issues. To cushion the blow, consider:

• Downsizing: A reduced standard of living is practically inevitable for both divorced men and women. Especially after the kids become adults, consider selling the house, acquiring a smaller vehicle, and making other changes;
• Reducing Expenses: In most cases, property taxes on a primary residence are reduced or eliminated once the owner reaches a certain age, but the same is usually not true for other property; and
• Maximizing Cash: To accomplish both the latter two objectives, a divorcee might consider exchanging a share of rental property for higher spousal support payments.

The future economic circumstances of both spouses is a relevant factor in both property division and alimony awards.

At Powers Kerr & Rashidi, PLLC, we care about the long-term financial impacts of divorce. Call us today for prompt assistance from an aggressive Cedar Park high asset divorce attorney. Mr. Powers is a Board Certified family law expert.

Source:

https://www.bgsu.edu/content/dam/BGSU/college-of-arts-and-sciences/NCFMR/documents/WP/wp-15-01-lin-brown-hammersmith.pdf