According to the Census Bureau’s American Community Survey, older Americans today are twice as likely to be divorced after 50 than they were just two decades ago. For the first time, this age group is more likely to be divorced than widowed.
Our Fairfax divorce attorneys understand that older individuals facing divorce have different priorities than younger couples. While younger divorcees often deal with child custody, child support, and debt division, older couples focus on asset and property division, the splitting of public benefits (such as Social Security or Social Security Disability Insurance), and the proper allocation of private retirement plans and pensions.
The Financial Challenges of Divorce Later in Life
For older adults, the financial strain of divorce can be more challenging. While divorce is difficult for anyone, individuals in their golden years often lack the same opportunities to rebuild financially, making fair resolution of these issues all the more critical.
It’s important to note that most accrued or vested retirement benefits are considered marital property and must be divided during a divorce. This includes military pensions, IRAs, veteran’s educational benefits, ERISA funds, employee stock option plans, 401k plans, and 403(b) plans. However, dividing these assets can be complicated, as the exact value of each plan may not be readily apparent, and the benefits may not be accessible for several years.
Case Example: Robinette v. Hunsecker
A recent case that highlights these complexities is Robinette v. Hunsecker, reviewed by the Maryland Court of Appeals. Although this case took place out of state, its legal principles are applicable to Virginia, as both states follow the “equitable distribution” model in divorce cases.
Case Background
The couple married in June 1981 and remained together until 1998, when they separated and later divorced. During their marriage, the husband worked for a local school district and participated in a pension plan.
As part of their divorce settlement agreement, the wife was entitled to half of the husband’s pension benefits accrued during their marriage, including potential death benefits. The agreement mistakenly referred to the plan as being regulated by the Employee Retirement Income Security Act (ERISA), but it was not. The plan did not allow for an “alternate payee” as ERISA does, and the necessary submission of the plan to the husband’s employer was never completed.
Pension Beneficiary Dispute
Two years later, the husband remarried and named his new wife as the beneficiary of his pension plan. He continued working at the school until his death nine years later. His second wife, as the personal representative of his estate, received a lump sum payment for death benefits and was set to receive $2,000 monthly thereafter.
The ex-wife, expecting her portion of the pension and death benefits per the divorce agreement, applied for her share, but her request was denied because she was not named as the beneficiary.
Court Ruling
The ex-wife filed a complaint in circuit court. Both parties agreed on the facts and sought summary judgment. The court sided with the ex-wife, stating it would be inequitable for the second wife to retain all pension benefits given the prior divorce agreement. The court approved a posthumous Qualified Domestic Relations Order (QDRO) to satisfy the requirements for the ex-wife to collect her rightful portion of benefits.
This ruling was affirmed by the state court of appeals.
Lessons Learned
Although the ex-wife ultimately secured a favorable outcome, this case underscores the importance of properly drafting settlement agreements regarding retirement benefit allocation. Careful attention during the divorce process can prevent prolonged legal battles and ensure that all parties receive their fair share of assets.
