Not too many divorcing couples in Pennsylvania have the kind of assets that Jeff Bezos and his soon-to-be-ex-wife have. However, divorces involving significant wealth can still present certain challenges not common with more traditional splits. In early 2019, the Amazon founder and his spouse jointly announced plans to end their 25-year marriage. High-profile couples like this may be able to avoid a message divorce by being proactive during the process.
Getting a divorce can be devastating at any age. Divorces between adults over the age of 50 have increased greatly over the last several decades in Pennsylvania. Most people at this age have planned for retirement for many years and wonder how they will be able to afford it after a divorce. There are several ways to prevent a divorce from affecting retirement.
A recent tax reform has drastically altered how alimony is figured into one's taxes, and these major overhauls are going to impact divorcees throughout Pennsylvania and the rest of the country. Many couples are now racing to complete their divorces before the new tax laws officially go on the books. Those who wait to get divorced may end up losing benefits and owe more money to the IRS at the end of the year.
For many exes in Pennsylvania, divorce can lead to major complications in retirement planning. Because retirement funds are often among the largest assets held by a married couple, the effect of splitting them in a divorce settlement can be significant. Exes may need to escalate their savings plans in order to restore their funds, especially as the cost of retirement continues to rise. A divorce can have significant, long-term effects on financial planning even beyond the immediate results of property division.
When couples in Pennsylvania make the decision to divorce, there can be serious, immediate financial concerns that follow. However, the financial impacts of divorce are not only those that occur immediately after the end of a marriage. It can be particularly important to handle important matters relating to retirement funds, life insurance policies and other accounts with beneficiaries.
Pennsylvania couples who are getting a divorce may need to divide assets and debts, and for some, bitcoins may be among the assets. The currency has increased in value and become better-known in the process, and it might increasingly feature in divorce cases.
When people in Pennsylvania get a divorce after 10 or more years of marriage, a lower-earning spouse may be eligible to draw Social Security benefits based on the earnings of the higher-earning spouse. A former spouse who receives these benefits will lose them upon remarriage. In some cases, if that marriage ends in death or divorce, the person might be able to resume receiving the benefits.
In most states around the country, including Pennsylvania, divorce rates are decreasing with every age group except those over 50. In fact, one in four couples over 50 will go through what many call a gray divorce, and this age group has experienced a staggering 50 percent increase in divorce rates over the last 20 years. Often, these individuals are retired and have their own unique set of financial consequences of divorce to deal with.
Getting divorced can result in individuals having to rebuild their finances from scratch. However, there are some steps Pennsylvania residents can take to lessen the negative impact divorce can have on their financial future.
Pennsylvania couples who are getting divorced should be aware that making wrong decisions about how to divide retirement assets can be very costly in the long run. Legal and accounting professionals spend a lot of time rectifying the mistakes made by divorcing couples who mishandle their retirement accounts. It is important a legal agreement is in place to avoid having to pay a high tax bill or ending up with no retirement funds at all.