dividing assets fairly in post-retirement split

            Posted on October 30, 2016 

Dividing assets fairly in post-retirement split

Q.   Bill and I were each 38 years old when we married. We both worked for the same company. We retired when we hit age 61.

Bill’s job over 27 years paid twice more than my job held for 25 years. So his pension is much larger than mine.

When we married I owned a $400,000 house. During the marriage we spent about $100,000 to improve that house, which was sold 10 years into our marriage for $700,000. We then paid $900,000 for our current home which is now worth $1.4 million. Since we had two salaries and no children, we have no debt.

During the marriage I inherited about $3 million from my parents. And we paid about $700,000 for assisted living for Bill’s mother, care-givers for his brother, and to put his nephew through college.

I have a 92-year-old Uncle Joe who has about $4.5 million. His only relatives are my sister and me, and his will gives each of us half of whatever’s left. But recently I learned my sister got Joe to change his will – which she’s refused to show me. So I’m guessing there’s a will contest in my future.

Right now, Bill wants a divorce so he can marry a woman he met online. They’ve spent a total of some 10 days together. I’m hoping marriage counseling will knock some sense into his head.

But Bill only wants to discuss getting me to agree to give him half the value of the house, half our current stock and savings accounts and half of whatever I get from my Uncle Joe. We would each keep our separate pensions. I want to end up with $350,000 more since we spent that $700,000 from my inheritances on his family.

Does Bill’s offer sound fair?

A. Judge’s don’t speculate about values. So, if you prove the will-change, that potential asset should go off the table.

The two pensions should be equally divided. If a Qualified Domestic Relations Order is needed, sign one for each pension to ensure you each get half. If the pensions are self-directed IRA’s, deduct the value of your IRA from the value of Bill’s IRA. Then he’ll roll half the difference into your new IRA-rollover account. Be sure rollovers are done so that they are tax-free.

Sell the house, even if you want to keep it. Then equally divide the net proceeds. That will avoid taxes on the first $250,000 you each declare as capital gains.

I doubt the judge will give you an extra $350,000 because you used $700,000 to benefit Bill’s family members. It’s wiser to make that demand and then give it up in exchange for Bill not going after money you might get from your uncle.

Two last pieces of advice. First, if you do stay together, do so conditioned on signing a post-marital agreement using the above terms and conditions.

Second, if Bill’s new best friend takes off with his money, don’t pay for his bus ticket back home.