Dividing up your assets can be one of the trickiest parts of getting a divorce. You and your former spouse may have very different ideas about what is fair. Various factors could impact your expectations, such as who earned more or whether there was an issue with infidelity in your marriage. Texas laws about divorce make it clear that assets should get divided fairly, but not necessarily evenly. If you are looking to maximize the division of these assets in your favor it is important to have an experienced Texas divorce attorney on your side.
How a Divorce Attorney Can Help You Handle Retirement Accounts
Retirement accounts are one kind of asset that many people find confusing during a divorce. If the account is only in your name and you opened it before you got married, why should you have to split it with your spouse? Generally speaking, retirement accounts that you invested in during your marriage will get treated as marital property for the purposes of asset division. Even if your spouse didn’t work and never contributed to your retirement account, he or she will likely receive at least half the value of accrued assets in the account during your marriage.
Regardless of who earned what, any income or new assets acquired during your marriage will get considered as marital property. Deposits made before your marriage will generally get treated as your personal property. Anything deposited during the marriage will likely get split.
This doesn’t mean the funds have to come directly out of the retirement account. The accrued balance can get factored into your list of assets and debts. In some cases, for example, your spouse may accept the same value in equity in your marital property instead of funds directly from the retirement account. If the actual retirement account will get split, a court order in the form of a divorce decree will help you. You can legally split Roth IRAs and 401K accounts without taxes, penalties or fees if you do so as part of a divorce. These specialized transactions require both special forms and a court order. An experienced divorce attorney will have the knowledge and expertise in dealing with these types of financial matters.
Common Retirement Division Mistakes During a Divorce
Even when spouses understand their rights and seek the retirement assets that they may be entitled to, unfavorable outcomes are still possible.
- Is giving up retirement assets in exchange for other assets truly a wise choice? Spouses should remember that other assets, such as the family home, might lose value or come with hidden costs.
- Do some retirement assets carry different tax penalties? If so, these liabilities should be factored into the value of each asset. For example, a Roth IRA will ultimately be worth more than a 401k of apparently equal value, since post-retirement withdrawals from Roth IRAs aren’t taxed.
- Is rolling over the total value of an ex-spouse’s retirement account the best option? Spouses have a one-time option of withdrawing funds from these accounts without a tax penalty, which may benefit people who are struggling with divorce expenses.
An experienced divorce attorney will be able to guide you and help you avoid the pitfalls that come with dividing assets during a divorce.
Let Your Divorce Attorney Guide You in Dividing Your Retirement Assets
Most importantly, you need the guidance of a qualified divorce attorney to ensure that you fully understand your rights during the property division process. Besides offering advice, an attorney is able to assist you in pursuing the full amount of retirement assets that you are entitled to.
It’s critical for you to consider their long-term financial needs and avoid making decisions that are emotional or impulsive. In many cases, the advice of a forensic financial expert, financial planner and/or tax advisor may help you identify the most advantageous options. Call our law offices today at any of our convenient locations and get a free consultation.
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