Statistics show that men and women in Texas have recently started getting more divorces later in life than before. For example, 50 years ago only two percent of men and women between 65 and 75 were divorced. Now, the rate is 11 percent for men and 15 percent for women. These divorces are often between partners who have been together for decades and may have accrued significant retirement funds.
Property division can work differently for couples near or past the age of retirement. For example, Social Security has different rules for divorced couples. For example, if a person has reached the age of 62 and was married to his or her partner for at least a decade, that person might be able to claim some of their ex-partner’s benefits. Even if the entire Social Security account is under only one ex-spouse’s name, it is still marital property, and the other party may have a right to claim as much as half of the payment. This is true even if the ex-spouse on the account has remarried.
This applies to other retirement accounts as well. For example, 401(k)s and IRAs are both subject to property division under Texas law. If a 401(k) or a 403(b) is divided among the separating spouses, then the spouse who has been newly awarded part of the account has the right to withdraw money from it once without triggering the 10 percent early withdrawal tax penalty that applies to those under 59 1/2 years old.
Although the divorce process usually focuses on the larger and more obvious assets such as a home, it is possible for the property division to address the financial needs of both parties. An attorney may be helpful in negotiating divorce settlements and other documents to provide for the ex-partners as they transition away from their former life.
Source: Forbes, “The Big Money Mistake Divorcing Women Make“, Kerry Hannon, July 03, 2014
