Dear Penny,
I have been separated for 10+ years after a 30+ year marriage. For the last 10 years I have supported the family home, paid all outstanding bills and paid off over $15,000 in credit card debt.
I also sold the family home last year and split the proceeds equally. Before I sold the house, I couldn’t afford a divorce attorney. (I made half of what I make now and keeping the house took most of my money.) I filed on my own behalf but it never went anywhere because they need paperwork from both parties , which (in turn) never happened.
I now have money to hire a lawyer, but I’m concerned about my savings and retirement accounts and the money from the sale of the family home. I’m still working and now I’m making over $80,000. But the problem is that he has no job and makes a living from selling the house. He’s 62 and could apply for retirement, but wants to wait a little longer.
A few years ago, I was advised by a lawyer that a judge could ask me to pay alimony because it was a long-term marriage and I’m the only one with an income.
I am considering investing the money from the sale of the house. Hopefully that shouldn’t be a problem because I’ve split those funds. However, I am concerned about my retirement accounts, which have grown significantly over the past 10 years. I’ve also donated $50 a month to my five grandchildren in a 529 plan for the past seven years.
I really want the divorce because I know it will make me feel better, but I don’t want to fall back into another fight financially. Before I hire a lawyer, do you have any advice on how to move on with my life?
-D
Robin Hartill [ The Penny Hoarder ]
Dear D,
Meeting an attorney is not the same as hiring an attorney. You don’t sign up to serve your husband with divorce papers by arranging a meetup. You can ask the same questions you ask in your letter to someone who knows your state’s divorce laws.
Just take the first step and book a consultation with a lawyer. In the meantime, I’m offering my non-lawyer perspective on the financial issues you’ve raised.
Your retirement savings would likely be split if you divorced. The money you saved along with the pre-marriage earnings would likely be yours. But money you saved and earned during your marriage would likely be shared.
The rules vary by state. In short, it’s usually a 50/50 split if you live in one of the nine community property states. But the other 41 states use a process called equitable distribution. In essence, the court seeks to divide wealth fairly, but not necessarily equally.
You obviously don’t want to share the accomplishments of the last decade with your estranged husband. But that’s a reason not to hesitate any longer. You want this divorce. By prolonging this, you are risking some of your future profits.
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Court-ordered alimony is an option, but not necessarily a given. Again, the laws vary by state. A judge would consider a number of factors, including your husband’s ability to support himself. Your husband probably got through on his own for 10 years without maintenance. Maybe that could strengthen your case against spousal support.
As for the 529 plans for your grandchildren, your husband might be after that money if you own the plans. But you owe taxes plus a 10% penalty if 529 funds are used for non-educational purposes. For this reason, most couples choose not to split 529 plan assets in divorce.
Obviously, a divorce has huge financial consequences. But consider the consequences of not getting divorced. While married, you cannot appoint your husband as a beneficiary of a workplace retirement account, such as a pension account, without his consent. a 401(k). Your husband is still your next of kin, which means he could make medical and financial decisions for you if you are unable to work. If you live in a community property state, you share responsibility for any debt your husband accumulates during your marriage.
You’ve had the last 10 years to think about every possible scenario. I don’t want to downplay the seriousness of this decision. But often when we brood over a big decision, the results we envision are far worse than reality.
Look at what you’ve accomplished in the last ten years: you’ve doubled your income. You have paid off debts. You were the only breadwinner. You may have financial hurdles ahead of you, but I think you can overcome them.
Lawyers are expensive. That’s how divorces are. But you’ve been stuck in limbo for 10 years. Carrying on will be priceless.
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Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.
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