When people get divorced at an older age, there are some typical issues that can arise. Common issues when divorcing late in life tend to center around concerns relating to aging and disability, including retirement, pensions, health, and the care of grandchildren, if the grandparents have adopted them. A client with questions about late-life divorce should talk to a Birmingham divorce attorney who understands how to address their particular concern, such as the division of a pension. They should also talk to a local probate attorney about how to revise their will and/or living trust.
It will likely be an advantage for one of the parties to retain the primary residence. This means one individual should remain in the house and the other should be compensated for living elsewhere. An individual becomes eligible for Alabama’s homestead exemption, a real estate property tax exemption, at age 65. There is no assessed value limitation on the state homestead exemption. County homestead exemptions also begin at age 65. There are limitations on county homestead exemptions.
An individual age 62 or older may qualify for the federal government’s Home Equity Conversion Mortgage (HECM), a reverse mortgage that can provide an income stream for a senior adult. A home can also provide the party who retains it with the ability to rent it. Further, a primary residence offers the advantage of not affecting eligibility for Medicaid if the property is occupied by the applicant.
An older couple considering divorce should discuss:
- whether they can have a civil conversation about medical needs, income streams, and property tax exemptions. If not, they may benefit from hiring a mediator;
- what documents they need to review to be informed about their decisions;
- the timeline for getting and reviewing these documents with their divorce attorneys in Bessemer, or anywhere else in Alabama, in relation to the timeline for the divorce;
- who would benefit from living in the primary residence more at this point; and
- what compensation the other person should receive for giving up the privilege of remaining in the primary residence.
If one or both of the spouses have pensions, they should request that the court issue a Qualified Domestic Relations Order (QDRO) to determine how their retirement benefits are divided. Each party should review a summary plan description of their own plan with their attorney. The spouses should ask questions about how the order will affect them. For example, if one party has taken loans against a 401(k) plan, this may need to be repaid before funds from the plan are split.
A divorce court cannot divide Social Security benefits. If the couple’s marriage lasts 10 or more years and the spouses are 62 or older, a party can collect retirement benefits from their former partner’s Social Security record. They can do this without reducing their former partner’s benefits, even after the divorce is final. In addition, a divorced party may be able to draw Social Security benefits of up to half of their former spouse’s benefit.
A person can begin receiving retirement benefits at age sixty-two on their own Social Security record or their former spouse’s record. They can switch to the other benefit of these two choices once they reach full retirement age, if the other benefit is higher. Once a person has been divorced for at least two years, they are entitled to benefits through their former spouse even if their former spouse is eligible but is not yet receiving benefits. If a person’s former spouse dies, an individual may be eligible to receive survivor benefits of 100% of the former spouse’s Social Security benefits. The person receiving such benefits must have been in a marriage that lasted at least 10 years, be at least sixty years old, and not entitled to retirement benefits equal to or greater than their former spouse’s benefit.
If an individual is blind or has a permanent and total disability, they should ask their attorney how this affects their exemptions and government benefits. It is important that the party know this to get a fair division of property through a court order.
For example, a person with a permanent and total disability will get a state homestead exemption with no maximum amount on the assessed value limitation. They and their spouse should be aware of this. That way, going into negotiations, both parties will know the person with the disability will have the advantage of receiving a state homestead exemption for their primary residence before they turn sixty-five years of age.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!