gray-divorce-issuesThe sources of income for an older divorcing spouse can look very different from younger counterparts. Here are some considerations:

  • Social security income: Social security is not a marital asset to be considered in the division of marital property. But, social security can be considered in examining a spouse’s cash flow for looking at property division or post-divorce maintenance. A person can begin to access social security benefits as early as age 62 or as late as age 70. And, a spouse or former spouse may get benefits based upon the other spouse’s social security contributions if the marriage lasted longer than 10 years and both spouses are over 62, the divorce has been over for two years, and the spouse seeking benefits has not remarried. The spousal benefit does not affect the amount the employed spouse receives.
  • Retirement plans: The age for receiving benefits from various types of retirement plans can vary by plan. Knowing the payment provisions for each plan in question may be essential to evaluating a spouse’s cash flow after divorce.
  • Passive Income: Passive income may include rental property income, dividends, interest income, and business interest distributions. Usually there are little restrictions on passive income, so these assets may be available immediately upon divorce.
  • Disability income: The sources of disability income may be a government plan, a private plan, or an employment benefit. Some may be taxable, while others are not. Most disability income is considered the separate property of the disabled spouse, but it remains important to know the terms of the individual plan to confirm.

One situation to watch out for is called the “double dip” where a spouse is required to divide or buy out a spouse’s interest in an asset as part of the division of property but then use that stream of income to provide post-divorce support. Thus, the same asset is being used twice for different purposes. This can happen to a family business, retirement benefits, and passive income.

Another possible landmine in senior divorces involves the issue of a person’s right to retire. What if the spouse always planning to retire at 55, but due to divorce or post-divorce support obligations is prevented from doing so by a court order? Or, what if the court determines to impute income to the pre-retirement level to provide post-divorce support for the other spouse?

The opposite of the right to retire early is the abiity to retire. After dividing half of the marital estate to the divorcing spouses, some may discover that they no longer have the ability to retire at age 65. Many may need to continue working in order to avoid a dramatic reduction in their planned retirement lifestyle.

Health issues provide another area where a senior divorce may be more complicated than another type of divorce. Health issues for the non-working spouse may be a ground for post-divorce maintenance support. However, health issues by the spouse with the assets or income could call to a halt any post-divorce support award. It may be better to evaluate awarding a spouse an asset that generates a stream of income rather than relying upon the continued post-divorce support of a spouse if health is a problem.

Another place for consideration with senior divorces is the increase in age-related expenses. Health insurance and medical costs increase with age. Additionally, a disabled spouse may require a caregiver, which also adds to the cash flow problems.

In support order for younger divorcing spouses, courts often order spouses to provide a life insurance policy to secure post-divorce support. However, in the situation of a senior divorce, life insurance may not be available to a spouse to purchase at a reasonable price if there is not already a policy in place.

 

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Photo of Michelle O'Neil Michelle O'Neil

Michelle May O’Neil has 27 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 27 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, 2011-2018, a peer-voted honor given to only about 5% of the lawyers in the state of Texas. In 2014-2018, 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. She was named one of the Best Lawyers in America for 2016 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.