A divorce is usually one of the most unpleasant things you have to go through in your life. The mental turbulence created by the entire process is often worsened by the monetary contest over the division of assets, which can vary from physical assets to future investments.
Retirement funds are often targeted by the spouse who has a lower income especially when he or she is unable to get any monetary benefits from their ex-spouse. So how would you protect yourself and your future finances in a divorce? Here are a few tips and tricks that you can employ to safeguard your assets in case you have to face this unhappy predicament.
The simplest thing to do would be to plan the entire thing right from the start. Nobody thinks that it could happen to them, especially when your relationship is going great. However nothing in this world lasts forever and relationships are no exceptions. And it is never a bad thing to keep communications clear between the two of you, even if the topic is an unpleasant possibility.
Ensure that you both agree on the division of your assets in case either of you files for a divorce. You can get a decree for this and it should include details about all kinds of assets related to your divorce. There are high chances that a normal agreement might get challenged when things get ugly. So it is advisable to get legal professionals to draw up your divorce decree.
Get a QDRO
A QDRO, or qualified domestic relations order, can help fairly protect your retirement assets. Ideally, you would have started this process before the divorce was finalized, but even after the fact a QDRO may still be a viable option. QDROs are a fairly obscure part of ERISA law though, so it’s best to get a hold of a QDRO attorney like Carla McKain at McKain Law to learn about your options. You must get professional advice about the legal aspects that govern your financials and pensions. These legal aspects define the division of assets in case of a divorce.
The division of retirement accounts and contribution plans is usually defined by either the decree or the QDRO, which regulates the movement of funds from one spouse to another. Even though retirement reserves should be divided between the two spouses during the divorce, many determining factors affect how the future payments get allocated. Pensions earned when the divorce is ongoing are usually deemed as joint assets. Still there are many ways in which the current or future pension amount might be divided amongst the two spouses.
Do Your Homework
People who learn the rules about the division of financial assets during a divorce are better equipped to evaluate how much they can retain. In case the divorce decree mentions that a particular asset or account will be divided equally, then there is no point in getting a rollover for the entire sum because the spouse will have the right to collect the entire statements of the assets. Rules and laws also vary between States so it will be wise to understand the particular laws applicable in your state.
Get Professional Representation
Even though it may seem that the division of your assets is quite straightforward, it is still advisable to consult a lawyer to examine the split of financial assets. There are chances that you might end up losing in certain cases because you weren’t aware of the best possible payout options, or you might have overlooked a certain detail.
Communication Is Important
You should be prompt in sending over any legal communication or court orders to your legal counsel as soon as you receive them. In case you procrastinate, there are chances that you might end up losing more than what you owed. Even though private pension plans are obligated to accept any court orders under the Pension Protection Act 2006 irrespective of the date of issue, still you must not waste time to submit the paperwork before any amount is divided. Failing to do so might incur additional costs in case you try to retrieve what you lost.
Create a Prenuptial Agreement
A prenuptial agreement is probably one of the most straightforward ways to protect your future in case of a divorce, provided it is not too late already. Make sure that you incorporate plans for the division of all kinds of present and future assets. You could also leave some room to wriggle in case you wish to make some mutually beneficial adjustments.
The bottom line is that divorce is not exactly a fun time, but being aware of the rules and regulations can help you to protect your future after the divorce. Also make sure you take professional legal help to ensure that you are doing what is best for you in the most convenient manner.