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Social Security benefits available to divorced spouses

A divorce in Maryland can lead to disputes over many issues, including child custody, property division and spousal support. Fortunately, Social Security rights are not affected by the legal wrangling during this stage. Whether a divorce is amicable or not, an individual who was married to their spouse for at least 10 years prior to parting ways could claim Social Security retirement benefits based on the other party's earnings. Even better, the claim does not require any further interaction with that party, and it won't affect their personal benefit.

While the benefit may be available, it may not be the best option for some individuals. The party with higher earnings over the years, for example, would probably not want to claim on their ex-spouse's record. However, it might be tempting to do so during the pre-retirement years while still earning wages at a job. It is important to carefully weigh the benefit against the potential penalty that could be imposed for earning beyond the Social Security Administration's earnings limit of $15,720 per year prior to full retirement age. Because 50 percent of the benefit is forfeited as a penalty when earnings exceed this limit, it may be better not to claim early unless one's wages are somewhat low.

Penalties can also affect certain assets that are distributed at the end of a marriage. For example, a 401(k) account funded with untaxed earnings carries a tax burden when the funds are eventually accessed. A retirement account that is funded with money that has already been taxed can continue to grow tax-free until the retirement years are reached.

An attorney assisting a client with a divorce may provide an overview of issues to keep in mind when seeking a fair settlement. This will also allow for proper documentation of one's rights to retirement accounts as one's legal team ensures that qualified domestic relations orders are filed with the appropriate account administrators.

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