Protecting Your Money in a Divorce

Q. My husband and I are getting divorced after 30 years of marriage. How can I protect myself financially?

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A. Unfortunately, you've got lots of company. The divorce rate among couples older than 50 has doubled in recent decades and now accounts for one of every four breakups, according to recent research. And after a couple has spent decades of saving and investing together, the stakes — and potential financial fallout — can be higher in such "gray" divorces.

Here are six things you can do to prepare:

1. Hire an experienced divorce attorney. Ideally, this person will emphasize mediation or collaborative divorce over litigation. Both spouses tend to fare better in structured processes where they negotiate solutions to their disputes, financial and otherwise, rather than letting a court decide. Get recommendations from friends or at such websites as DivorceNet.com, which also provides information on state laws.

2. Open accounts in your name only. If you're a nonworking spouse (say, a longtime stay-at-home mom), it's important for you to start right away to establish your own credit history in case you later need a car loan or mortgage. Even if you already have a history on file, many lawyers advise freezing or closing joint bank and credit card accounts to prevent you from being responsible for buying sprees by your soon-to-be former spouse. Car insurance policies and the like should also be changed to reflect your new solo status.

3. Take inventory of assets and debts. With your attorney's help, ask for a full disclosure of all joint and individually owned financial assets so you can know where your money is and where it goes. Make copies for safekeeping of loans and credit card accounts, as well as home equity lines, past tax returns and business debts. You'll also want to get a handle on "nonmarital assets," things considered to belong to only one spouse, such as property brought to the marriage, inheritances and gifts given specifically to one person.

4. Sort out mortgage and rent payments. Mortgage companies and landlords expect payments to be made regardless of your personal situation. You may want to move out to your own place as soon as possible, even before a divorce, but that might hurt your claim to the home (and you will still be responsible for at least half the mortgage payment). Sometimes the two spouses can reach an arrangement about who keeps the home, but often it makes better financial sense to sell it.

5. Be prepared to share retirement accounts. Just because your name is on a 401(k) or IRA doesn't mean it's not up for grabs. These funds may be considered "marital property" and subject to negotiation. (There are nine "community property" states where everything owned together is subject to an expected 50-50 split — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. The others aim for a "fair and equitable" division.) Eventual division of 401(k)s, 403(b)s and pensions will be governed by a legal document called a QDRO; the carving up of IRAs is addressed in the divorce decree.

6. Change your will. As you prepare for a divorce, or immediately upon its settlement, adjust your will accordingly. In most states, former spouses are automatically excluded from serving as trustees or estate administrators or from receiving under your will.

Go to this AARP Web page for more tips specific to later-life divorce.

Sid Kirchheimer writes about consumer issues.