Stephen J. Buhler, Attorney at Law

Divorce and its financial impact

Utah residents who are 50 years old or older and who get a divorce should be aware of how a divorce can impact their retirement funds, as these couples generally have less time to rebuild their retirement nest.

Since the 1990s, the divorce rate for individuals who are at least 50 years old has doubled. The Pew Research Center reports that in 2015, 10 people out of every 1,000 married people went through a divorce. The research organization also states that the occurrences of gray divorces are even higher among people who have remarried.

To mitigate the impact a divorce can have on one's retirement assets, there are certain steps that can be taken. A collaborative divorce may be an option for some couples. They can use the process to work together with their spouses and attorneys to achieve settlement terms that are agreeable to both parties.

For individuals who are already divorced, they may want to consider reexamining their divorce settlement terms. The changes in the tax law will make alimony payments nontaxable for settlements that are obtained in 2019 and later. Individuals who have to make the payments will not be able to deduct them from their taxable income, and those who receive the payments will not have to include them in their taxable income. This means that even if an ex-spouse pays less alimony, the receiving spouse will still benefit as no taxes will be assessed on what they receive.

An attorney who practices divorce law may advise a client about which legal avenues should be pursued to obtain the desired divorce settlement terms. Litigation may be used to resolve disputes regarding divorce legal issues such as the division of high-value assets, like retirement funds. The attorney may recommend negotiation to resolve other divorce disputes regarding child custody or alimony.

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