Getting divorced past the age of 50 can present a number of problems and challenges in Illinois. For example, these soon-to-be exes will need to give more consideration to assets like retirement plans. After all, they will have fewer years to save before retiring.
One of the major issues that spouses going through a “gray divorce” should not overlook is that of taxes. If one spouse is established in their career while the other sacrificed to raise the children, alimony, in Illinois known as maintenance, may be necessary. The new tax law passed in 2017 now makes the receipt of maintenance largely not taxable. Meanwhile, the spouse who pays the maintenance has lost the deduction to which they were previously entitled. Illinois has recognized this change by now ordering maintenance from a formula using the net income of both parties (33.33% of net of the person paying less 25% of net from the person receiving maintenance up to a cap of 40% of total net income of the parties).
In addition, spouses must also consider how a divorce will impact their estate plans. They will need to take the obvious steps to separate their accounts. The spouse must remain the beneficiary of the pension plan until the divorce is finalized; other policies and accounts should have their beneficiary changed at the same time. The accounts will obviously be dealt with and divided during or at the resolution of the divorce, leading to a new estate plan. This process is usually done by a qualified domestic relations order often prepared by a lawyer concentrating in these plans.
A family law attorney helps a client prepare for the divorce process and fight for a fair settlement. A family law attorney will be able to advise how the new tax laws will affect their client’s financial situation after the divorce. There are numerous additional ramifications of a gray divorce that must be dealt with in the divorce agreement. Legal counsel can be of assistance in resolving many of these issues.