Depending on the age of the spouses involved, divorce can lead to many unique issues. As partners pass the age of 50, there are considerations that may not be present for younger spouses. Gray divorces in Indiana may still be complicated even when there are no children involved because they invoke new issues that can be every bit as complicated to resolve.
As the spouses get older, there is the possibility that an income gap may develop that would require the payment of alimony. However, the tax treatment of alimony has recently changed. In the past, spousal support/alimony payments were deductible for the party paying them but taxable for the recipient. This has now been practically reversed by the new tax laws, and it may require some negotiation when it comes to asset division.
In addition, gray divorce will also necessitate changes to the estate plan. Of course, the beneficiary on a retirement account cannot be changed before the divorce is final. However, beneficiaries can and should be changed on other types of accounts. Further changes will be necessary if the couple shared one estate plan. Each party must start their own estate plan from the assets that they receive and their future income.
These issues require forethought and consideration because a gray divorce can have profound implications for both retirement and estate planning. Unfortunately, late-in-life separations are becoming more common in the U.S., but the spouses may not be informed about changes in the law and other factors that may affect them. A divorce attorney could advise a client of the considerations and help negotiate for a settlement that ensures a better financial future.