Posted by Michelle May O’Neil on June 6, 2011

While the overall divorce rate has decreased slightly over the past two decades, for those over 50 it has doubled.  Paradoxically, experts chalk the increase up to baby boomers’ affinity for marriage in the first place. More older people are on their second and third marriages by the time they hit 50 and those are marriages that are less likely to last.

Regardless of first, second or eighth, the stakes are higher for couples in their 50s, 60s and 70s. By the time most people are 50, they have a long work history, own some real estate, have a retirement account, life insurance and more – in which case, it’s critical to get the best settlement possible.

Here are some mistakes particularly common to the over-50 set, all of which can lead to a lower-than-deserved settlement or make you pay your ex more than you should.

Mistake 1: Ignoring taxes on retirement funds

For those over 50, 401(k)s and other pre-tax retirement accounts may be the most significant asset other than the family home. That makes it essential that both sides understand their true value, which is actually considerably less than the balance. Because the money’s taxed upon withdrawal, the real value of the account is only about 65% of what the statement says. This miscalculation can hurt, especially in community property states like California, Texas, Arizona and Nevada, where divorcing couples often split assets evenly: One spouse takes the house, the other takes the retirement fund and savings accounts, which may look equivalent on paper. Lawyers suggest negotiating for a larger portion of other shared savings to make the trade more equitable.

Mistake 2: Overvaluing alimony, undervaluing Social Security

Whether a couple is retired or still working, monthly income may actually be more important than the division of hard assets. Alimony, which may be awarded to the spouse who earns less or has been out of the workforce for some time, is one of the most common ways divorce settlements compensate for discrepancies in a couple’s income. But banking on monthly payments from an ex-spouse gets riskier every year after 50, as the chance of them dying increases.  One way to protect yourself, is to get a life insurance policy on your ex. It’s not enough to be the beneficiary on your former spouses’ life insurance plan — he or she can change that at any time. You want to own the policy outright.

On the other hand, Social Security is often undervalued in divorce negotiations. If the couple was married for at least 10 years, one spouse is entitled to the benefits of the other at age 62 – as long she/he remains unmarried. A person who makes less than his or her spouse will want to claim the higher-earning spouses’ Social Security, as it will be worth more. If your spouse has a claim to your benefits, remember to figure that amount into negotiations for alimony or other payments.

Mistake 3: Forgetting about the kids

Older couples have older children – teenagers, college students, or even independent adults – which means custody battles may not be as pitched, if they exist at all. That doesn’t mean there aren’t issues. To prevent conflagrations down the road, make a plan to ensure that the assets being passed along to the children are set up appropriately so that your children, rather than, say, your ex’s future spouse or your kids’ new wife, get the money. For starters, create a "lifetime asset protection trust" for your kids to protect the assets in case they, too, get divorced. The trust will keep your kid’s ex-spouse – or anyone else – from receiving any of the money you leave behind for them.

One expert suggests, if you have children under age 18, "it’s really important to have the guardian of the children … be separate and distinct from the guardian of the money." That may seem counter-intuitive, and in reality, each spouse will control some money, but both money and children can be manipulated in messy divorces. Splitting those responsibilities and obligations can create a system of checks and balances.

Hat tip to Catey Hill for her March 23, 2011 article on

Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Michelle O'Neil Michelle O'Neil

Michelle May O’Neil has 30+ years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes…

Michelle May O’Neil has 30+ years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes genuine compassion for her client’s difficulties, yet she can be relentless when in pursuit of a client’s goals. One judge said of Ms. O’Neil, “She cannot be out-gunned, out-briefed, or out-lawyered!”

Family Law Specialist

Ms. O’Neil became a board-certified family law specialist by the Texas Board of Legal Specialization in 1997 and has maintained her certification since that time. While representing clients in litigation before the trial court is an important part of her practice, Ms. O’Neil also handles appellate matters in the trial court, courts of appeals and Texas Supreme Court. Lawyers frequently consult with Ms. O’Neil on their litigation cases about specialized legal issues requiring particularized attention both at the trial court and appellate levels. This gives her a unique perspective and depth of perception that benefits both her litigation and appellate clients.

Top Lawyers in Texas and America

Ms. O’Neil has been named to the list of Texas SuperLawyers for many years, a peer-voted honor given to only about 5% of the lawyers in the state of Texas. Ms. O’Neil received the special honor of being named by Texas SuperLawyers as one of the Top 50 Women Lawyers in Texas, Top 100 Lawyers in Texas, and Top 100 Lawyers in DFW for multiple years. She was named one of the Best Lawyers in America and received an “A-V” peer review rating by Martindale-Hubbell Legal Directories for the highest quality legal ability and ethical standards.

Author and Speaker

A noted author, Ms. O’Neil released her second book Basics of Texas Divorce Law in November 2010, with a second edition released in 2013, and a third edition expected in 2015.  Her first book, All About Texas Law and Kids, was published in September 2009 by Texas Lawyer Press. In 2012, Ms. O’Neil co-authored the booklets What You Need To Know About Common Law Marriage In Texas and Social Study Evaluations.  The State Bar of Texas and other providers of continuing education for attorneys frequently enlist Ms. O’Neil to provide instruction to attorneys on topics of her expertise in the family law arena.