Some people who are in nontraditional marriages may think that when they go through the divorce process, it is different for them than it is for traditional couples. The truth is, it’s not. In Massachusetts, it is the same process for same-sex couples and heterosexual couples. When same-sex spouses divorce, particularly just before or during their retirement years, they, just like every other couple in their same position, need to concern themselves with splitting retirement accounts or assets in a way that will not have too big an impact on their standard of living when all is said and done.
Gray divorce, divorce for those aged 50 or greater, is on the rise in the United States and has been for several decades now. Retirement accounts and real estate are often the biggest assets couples in this age group have. That means that retirement accounts are often up for grabs. There is a certain way one must go about accessing funds in these accounts, though, for the purpose of divorce asset division.
Qualified Domestic Relations Orders are needed that specifies the amount to be transferred from a retirement account and where it is going. Money can be rolled directly into a new retirement account set up for the receiving spouse or one may take the distribution in cash to use it however one pleases. A QDRO allows the account owner to take the early distribution without any tax penalties. The receiving spouse may have to pay income tax on the distribution if he or she fails to put the money in his or her own qualifying retirement fund.
Gray divorce has the ability to hurt one’s retirement lifestyle, particularly if one is hit with taxes and penalties related to his or her divorce settlement. With the assistance of legal counsel, same-sex spouses in Massachusetts who are preparing for a gray divorce can negotiate property division settlements that may or may not include the division of retirement accounts so that each party walks away with his or her fair share of marital assets. It can take time to work it all out, but in the end each party can move on satisfied with the end result.