Couples who are in or nearing retirement are at serious risk for financial troubles if they decide to divorce. This is because, unlike younger folks, they do not have the time to earn back the money they may lose in the process. As such, it is critical that older couples plan carefully before deciding to file. The following covers some potential strategies, and explains how they can effectively mitigate the risk of costly mistakes often made during a gray divorce.
Take an Honest Look at Your Debts and Income
Because the potential for added income is limited as you near or enter retirement, it is crucial that you take an honest look at your income and debts before deciding to file. Not only does this help you understand what sort of situation you are up against, it can assist you in creating a viable strategy, moving forward. For example, if you find that your combined income and debts simply cannot be split without making sacrifices, you can decide, jointly, to sell the home, pay off your debts, and then divide whatever proceeds are left.
Understand that Illinois is an Equitable Distribution State
Another key to protecting your finances in divorce is to recognize that Illinois is an equitable distribution state, not a50-50 state. This might not seem like a big deal, but for those that have significant income gaps could find that their income distribution is less than they might have originally anticipated. As an example, a spouse that stayed home to care for children and then never reentered the workforce may be owed lifetime annuity payments if they do not have any other assets to sustain themselves after the divorce is complete.
Reduce Living Costs and Increase Income
Strategy-wise, older couples typically use a combination of reducing their living costs and finding small ways to increase their income. For example, rather than keeping the family home and gas-guzzling or high-insurance premium vehicles, they may sell the items and choose to downsize.
While downsizing may be adequate enough for some couples, others may also have to add more income to survive. Some delay the divorce to earn that money. Others choose to push out their retirement. Still others take on small jobs, such as dog walking to add just a little more money to their bank accounts each month.
Avoid Common and Costly Mistakes
Because do-it-yourself divorce is cheaper than hiring an attorney, many couples may be tempted to choose this route. Sadly, it may end up costing you more than you save. Costly mistakes, particularly those that involve the splitting of retirement accounts, can do significant damage to one or both parties. Moreover, there are some mistakes that cannot be corrected. Reduce the risk and obtain experienced legal representation for your case.
Mevorah & Giglio Law Offices can help you work through the divorce process. Dedicated to your best interests, our DuPage County divorce lawyers can help you develop creative strategies that may help you mitigate the financial risks of a gray divorce. Learn more by scheduling a free consultation. Call 630-932-9100 today.
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