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Divorce and its potential impact on retirement savings

On Behalf of | Dec 28, 2021 | divorce

Divorce and its financial repercussions can affect a California spouse for years to come. While money-related changes are inevitable, it is prudent to consider how to mitigate negative consequences as much as possible, especially with retirement savings. With preparation and an objective to make prudent financial decisions, a divorce does not have to devastate one’s plans for his or her golden years. 

What happens to these assets during divorce? 

Retirement savings are some of the most complicated assets to divide during a divorce. Depending on the specific type of account, such as with a 401(k), it may be necessary to have certain legal documents drafted in order to allow the other spouse to receive payments or have access to benefits. Drafting a Qualified Domestic Relations Order with the help of an experienced legal professional is an important step in this process. 

For other types of accounts, such as an IRA, it may only be necessary for the account holder to draft a letter of instruction to the institution to roll over the appropriate portion to a separate IRA. Even in divorces that are amicable or respectfully negotiated, a spouse may benefit from having guidance regarding how to ensure the fair division of all retirement assets. Any savings accumulated over the course of the marriage likely qualify as marital property and are therefore eligible for property division during divorce proceedings. 

Fair property division 

Retirement savings are often some of the most contested assets in a divorce. A California spouse facing the process of ending a marriage and dividing assets will benefit from working with an experienced property division attorney at every step. With guidance, one has a higher chance of securing terms that allow for stability and securing long-term.