Wednesday, February 27, 2008

Divorce, Property Division and Five Tips on Retirement Assets

Remember that retirement benefits acquired during marriage come into the marital pot for division. Fox Business has an article giving some tips for dealing with retirement benefits, Five Tips to Protect Your Retirement Assets in a Divorce. Some high points:

"When it comes to splitting assets during a divorce, the house and retirement funds are usually the biggest. As the housing market tumbles, retirement assets are taking center stage."


The type of fund doesn't matter: Whether it's a pension, 401(k) or profit-sharing agreement, it will most likely be split up in your divorce settlement.

The best way to split up qualified accounts like 401(k)s and ESOPs is to use a Qualified Domestic Relations Order [QDRO] in your settlement. A QDRO establishes what each party is entitled to designates the amount of tax each party pays on the account.
Choosing not to use a QDRO is risky and can leave you paying taxes on money distributed to your ex.
I have an earlier post on QDRO's here.

Fox Business also touts prenuptial agreements:
The best way to preserve your assets is to have clearly defined agreements relating to those assets, Beaulier said. A prenuptial agreement that fully discloses all the assets and liabilities of each party before the union and an agreement for how the assets will be handled if a divorce occurs is crucial

Because retirement benefits are considered marital assets, you have to determine the present value of each plan.

“Retaining records of what each person has when they enter into marriage can save thousands of dollars in a divorce,” Beaulier said.
For more information on Indiana prenuptial agreements, take a look at my Indiana Prenuptial FAQ. The article does not mention post-nuptial agreements. For those, take a look at the articles here.

Update 4/15/08: New Indiana Court of Appeals decision - When is Spouse Entitled to the QDRO.


sararose79 said...

Hi! I'm needing some good legal advice right now.I'm going through divorce.My husband & I started an excavating company together about 2 years ago.It has a good reputation and has done rather well.However,he is making it out to be a struggling business (this is due to other contractors not paying us @ the moment).I'm concerned about how much I'm going to get.Am I entitled to half of the assets (i.e.trucks,trailers,equipment,atvs,etc.). How do they determine how much I get?I have an attorney,but she's not very aggressive.Also,having custody issues.

Sam Hasler said...

First, I cannot give legal advice on this blog. Giving legal advice about specific cases is not what this blog is about. It is about giving general information and news.

Which leads me to the second thing, there is an archive of old articles by topic. The one you want to look at is property issues.

Blogger calls them "Labels". You will find that label at the bottom of the post. Just click and go.