Pilots’ Unique Divorce Challenges
Commercial airline pilots face unique professional and personal challenges. One of the biggest personal challenges among pilots may be a high likelihood of divorce, as illustrated by the fact that pilots overall have a 30.5% divorce rate, while some pilot groups have divorce rates as high as 75%.1
While divorce can be a difficult and emotional event for anyone, it presents unique financial considerations for airline pilots. Because pilots often have complex compensation packages and retirement plans, the division of assets in a divorce can be particularly complicated. Following are six important financial considerations for pilots facing divorce.
#1 – Spousal Support
If you’re an airline pilot going through a divorce, one of your most significant financial considerations may be spousal support. If you have a high income, as many pilots do, your spouse may be accustomed to a certain lifestyle. As a result, the court may require you pay a significant amount of spousal support to continue maintaining that lifestyle.
#2 – Child Support
If you have children, the amount of child support you’re required to pay will also be an important factor in your divorce settlement. The court will typically consider your total income and your child(ren)’s specific needs in determining the amount of child support you’ll pay. It’s important to note that child support payments are not tax deductible, so they can have a significant impact on your take-home pay.
#3 – Division of Assets
As a high-income earner, you likely have significant assets, such as investment and retirement accounts, real estate, stock options and more. These assets will need to be divided fairly between you and your soon-to-be ex-spouse.
Because the method of distribution depends largely on the laws of the jurisdiction in which the divorce is taking place, it’s important to work with a qualified divorce attorney to understand your options and ensure your interests are protected. You should also conduct a thorough tax analysis of all assets to understand their potential tax implications, should your divorce require they be transferred or sold.
#4 – Taxes
Your complex compensation structure and work schedule may result in unique tax considerations. It’s wise to work with a qualified tax professional who can help you minimize your tax liabilities and make informed decisions regarding the division of assets, spousal and child support payments, and retirement account distributions.
#5 – Retirement Planning
As an airline pilot, you may have several types of retirement accounts, including a 401k and/or pension plan, among others. The division of these accounts during your divorce can be a complex process that may include the need for a qualified domestic relations order (QDRO), which is a legal document that specifies how and to whom retirement account assets should be distributed during a divorce.
In addition to the challenges of dividing up retirement account assets in a divorce, you must also reevaluate your retirement goals and progress toward those goals in light of your new situation. Work with your wealth manager to make adjustments to your plan and update all account beneficiaries.
#6 – Insurance
If you’re like many pilots, you have access to generous insurance benefits including health, life and disability insurance. These benefits can have significant financial value and will likely be considered when determining the division of assets and the ongoing financial support to which your ex-spouse is entitled. It’s vital that you understand the details and implications of these policies in order to ensure they’re properly accounted for during the divorce process.
Airline pilots face a unique set of personal, professional and financial challenges. Long work hours and frequent time spent away from home can take a toll on a pilot’s marriage. If you find yourself facing a divorce, it’s important to understand how your professional situation may impact your divorce settlement and long-term financial outlook.
Are you feeling overwhelmed by the complexities of your divorce? Creative Planning is here for you. Our aviation specialty practice includes teams of experienced professionals who focus on helping pilots navigate the unique financial challenges of their professional and personal lives. If you could use some help with your divorce settlement, or with any other financial matter, schedule a call with a member of our team.