A friend of ours announced recently that her parents were celebrating their 60th anniversary. Their marriage is rare, especially these days. Divorce attorneys in Illinois and elsewhere report counseling more couples looking to end their long-term marriages. Many times, a husband and wife drift apart over the years — like Al and Tipper Gore, for example — and decide to go their separate ways.
These divorces start amicably. The marriage isn’t broken; it’s just obsolete. The longer a couple has been together, though, the more intertwined their finances are, and complicated finances can turn amicable into adversarial very quickly.
For couples that have done well, the division of assets can be even trickier. Over the years, they have accumulated investments and retirement accounts, second homes, even a business. State laws govern some of these; federal laws govern others. The more government regulations a couple deals with, the higher the frustration level.
Still, good legal counsel will keep each spouse focused on the original objective: financial security for each of them, into retirement and old age.
Some assets have fixed values. Life insurance policies, for example, can be divided up easily. Others, though, not so much.
The family home is usually the largest shared asset. With the real estate market such a mess, it can be harder to settle on a value for the home, much less to sell it. If one spouse keeps the house, will the other contribute to its upkeep in any way? For example, just getting a house ready to sell — even down the road, when the market begins to recover — can mean repairs and upgrades. Will both pay? Or just the spouse who held onto the house when the market was so bad?
When there is a great disparity in income between the spouses, there is generally as big a disparity in their retirement funds. Deciding how to divide these can be a daunting task, and a task that requires a certain amount of legal knowledge.
We’ll continue this in our next post.
Source: Wall Street Journal, “The ‘Splitting’ Headaches of Late-Life Divorce,” Kelly Greene, Aug. 6, 2011