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Dividing assets in divorce for couples in or near retirement

The details of a divorce can change significantly as couples age. For separations involving people near or in retirement, often referred to as "gray divorces," children are not usually an issue, but financial divisions become more important. It's crucial for couples in Maryland to understand how to properly divide up assets so that both parties will be comfortable once separated.

Dividing retirement accounts like pensions, 401(k)s and IRAs can be complicated, and there are a lot of tax implications to consider. If specific rules aren't followed, one or both parties could suffer from extensive penalties. When thinking about strategies to divide things up, it's important for couples to realize that each person's total wealth is likely to decrease. This is just the reality of splitting up a single pool of assets from one home into two.

In order for the split of a pension or 401(k) to be legally binding, a qualified domestic relations order is required. This gives the recipient spouse a one-time opportunity to take money out of the account with some breaks on taxes. Individuals often use these funds to put a down payment on a house or roll more money into a more favorable account. Division of IRAs is done during divorce or separation hearings, not through QDROs.

Whether a gray divorce is amicable or contested, both parties may benefit from the support and guidance of attorneys. Financial well-being at an older age has a huge impact on overall quality of life, and it's the responsibility of an attorney to protect their client's financial interests any way they can. Agreements can often be reached through negotiations out of court.

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