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How divorce may effect finances in retirement

Some Texas women may want to consider keeping the home in a divorce even though this is not the advice usually given by financial professionals. The reason they advise against it is that it may be financially impossible to afford the home. A woman may be able to pay the mortgage but might struggle with the additional costs of maintaining the home including upkeep, insurance, taxes and utilities.

However, a study by the Center for Retirement Research found that owning a home could make the difference for women in terms of their financial stability after a divorce. In general, divorce leaves people in a poorer position financially, and the study found that households that had been through a divorce had a 30 percent drop in wealth compared to households that had not. Divorced people were also 5 percent more likely to use up all assets. The exception was single divorced women who were financially in the same position as women who had never married.

Women are often tempted to keep the home for sentimental reasons or because it represents more stability for children after the divorce. One expert says she only advises women to keep the family home if they are able to hang on to it for a minimum of five years. In the long run, it can represent significant equity.

In Texas, the home and most other assets acquired after the marriage are usually considered marital property for purposes of division. This may be particularly complex in a high-asset divorce. The couple may have complicated investments, overseas real estate and business interests. Couples who are selling property should be aware that there could be taxes associated with the sale. They should also be aware of any taxes and penalties that may be levied if a retirement account is divided. An attorney can often assist with the preparation of a settlement agreement that takes these factors into account.

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