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Retiring and Faced with Divorce?

As a family law attorney, I am beginning to see increasing numbers of individuals who are nearing retirement or already retired and who are now facing separation and divorce. Amongst many others, these cases are often difficult for least a couple of reasons:

1. There are both separate and marital assets that have to be accounted for; and/or

2. There isn't sufficient income to support both spouses separately and individually. 

If there are two individuals, both of whom are retired, and they are living exclusively (or pretty close) on their Social Security Retirement Income, then some hard decisions have to be made. We first ask whether each of the parties can live independently on their respective retirement income. If not, then we work on identifying ways to supplement that income, and sometimes that means selling assets - hopefully there are some.

In some instances, there are simply insufficient assets that, even if sold, will not adequately supplement the income in any meaningful way. Then we start discussing whether moving in with an adult child is an option. Sometimes it is. Sometimes there are no children. Then the only options are to determine how to stretch the income the individual has as far as possible in order to make ends meet. For some reading this, there may be no real good news.

If there are some assets that can be sold, then there may be some hope. Let's say that the only valuable asset is a house and that it's worth $150,000. If we sell the house and split the proceeds, then each party receives approximately $75,000, less 6.00% for realtors fees. So realistically, each party might actually receive $70,500. If the individual is 67 years old, then the principal could add about $295 per month to the individual's income. For the sake of simplicity, I'm not accounting for any investment income that might be realized from the principal, which will dwindle over time as the principal is drawn down.

The bottom line for the family with a limited fixed income, divorce can be devastating.

Then there's the couple who got married when they were 50 years old, one or both of them bringing substantial assets into the marriage which they accrued prior to getting married. This is where matters start to get complicated. What was done with the "separate" assets that were brought into the marriage? Often times the separate assets remain the individual's separate assets, assuming we can trace them. It's sometimes harder than it might sound. Let's say that the husband had $50,000 in a savings account. The parties then open a joint savings account and husband transfers all $50k into the joint savings account when it's opened. When the parties separate, the new joint account now only has $45,000, and during the marriage, there were large withdrawals and deposits. Is the $45k husband's separate property still, is it part separate and part marital, or is it all marital. The classic legal answer is that it depends. Did I say this gets complicated?

Another scenario. Wife has a retirement account that was funded prior to getting married. The parties get married, and then to buy a new house, wife withdraws all her retirement funds to make the down payment. In North Carolina, and with few exceptions, wife's contribution to the down payment will be construed as a gift to the marriage, with the down payment becoming marital property. This might be a factor for an unequal distribution in Wife's favor, but Wife would not be entitled to a credit for her contribution of separate assets to purchase the marital residence.

No matter your circumstances, if you are facing separation or have already separated, you should at least consult with an attorney. Often the low cost of a consultation can save an individual substantial angst about what the future might hold, and it can prevent costly mistakes as you try to navigate the uncharted waters of separation and divorce.

If you or a loved one are facing these or similar circumstances, contact us at Schmitz Law, PC., by phone at 336-714-2380 or visit our website at

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