Couples over the age of 50 may sometimes hesitate in getting a divorce because of Arizona’s community property laws. Generally, the court divides all property, assets and funds acquired during a marriage equally between both spouses. When dissolving the union seems like the most practical method to find happiness, understanding how retirement plans split up during a divorce procedure may help in preparing for a new future.
There are different types of retirement or pension plans that working spouses may have contributed to during their career. It is important to understand each fund’s requirements for closing the account or receiving a cash distribution. According to Kiplinger magazine, the value and contents of a 401(k) plan may be part of the marital property. In an Arizona divorce, the working spouse may need to provide the nonworking spouse with a cash distribution worth half the value of the funds he or she would have if the couple stayed married.
Figuring alimony or spousal support with a retirement plan
Many individuals going through a gray divorce may not be able to start a new career or find a job that pays as much as what the couple earned together. A spouse, however, has a legal right to request regular alimony or support payments to help support and maintain his or her lifestyle. If there is a retirement plan or pension fund, a spouse may request receiving periodic distributions from it as part of his or her support payments.
Applying for Social Security benefits after divorce
When one spouse earned less income than the other partner, he or she may receive Social Security benefits based on the other spouse’s income. As reported on the Social Security Administration’s website, a divorced spouse who reaches full retirement age may receive benefits equal to one-half of the value of his or her ex-spouse’s benefits.
While dividing property and assets is never an easy task, planning ahead of time on what to expect during a divorce may help in avoiding last-minute disputes.