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Property division for divorcing baby boomers

Texas couples might be interested in a report by the National Center for Family & Marriage Research that indicates the divorce rate for individuals over the age of 50 doubled from 1990 to 2014. Over approximately the same time period, the rate for those over the age of 65 tripled. When couples divorce later in life, pensions and retirement accounts are often points of contention.

Generally, retirement benefits that have been gained during the term of the marriage will be divided equally. The theory is that the couple was saving money to be used by both parties, and thus these assets should be divided on divorce for both of them. Retirement accounts are typically divided based on their value after tax and they may be a couples' most valuable assets. Often, it is a mistake to trade pension or retirement funds for real estate.

The tax status of each individual may also bear on the division of retirement accounts. Pensions, 401(k)s and IRAs are taxed when funds are withdrawn, while Roth IRAs and Roth 401(k)s are taxed when funds are contributed. Thus, money withdrawn from the latter types of accounts comes out tax-free. If the two parties to the divorce are in different tax brackets, it may make sense for the couple to divide retirement funds unevenly once tax consequences are accounted for, especially if the couple had non-Roth accounts.

In addition to reviewing retirement accounts and pensions, couples who are facing the end of a marriage are wise to change the named beneficiaries on other assets like insurance policies and real estate. An attorney with experience in family law may assist a client who is going through a divorce by examining assets and liabilities and negotiating a property settlement agreement.

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