Many people who are going through a divorce know that it can be tough to find a mutually satisfying agreement while remaining amicable. This can be particularly true when it comes to dividing up retirement funds.
Retirement accounts can be significant assets, and dividing them correctly is crucial in a divorce agreement. If done incorrectly, you could be stuck with hefty fees, tax penalties and an arrangement that isn't beneficial for either party.
If you are going through a divorce and are considering how to divide your retirement accounts, keep reading for some important tips that you should take into deliberation.
Include every account
Be sure to include every possible retirement fund available when you are dividing assets in a divorce. Don't overlook anything: Dig up every retirement fund that you have, including old pension plans that you may have missed. Otherwise, you could miss out on major assets.
Some couples may be tempted to divide their retirement accounts by themselves, mainly if they are keen to remain amicable and avoid litigation. Don't be fooled, though: This can actually end up much more complicated than intended. Divorce experts warn that attempting a do-it-yourself divorce can pose significant risks. Any minute legal details that are overlooked or processed incorrectly can become big headaches with even more significant legal fees. Rather than having to pay a professional to fix any mistakes, divide your accounts correctly by hiring an expert from the get-go.
Find a good fit
When seeking a professional to assist with a divorce, there are some important things to consider. You should choose an expert who has an extensive background in dealing with finances, retirement accounts and high-asset divorce. Frequently, someone who has merely practiced family law will not have the expertise to craft a satisfactory financial agreement. A specialist from your county will have the necessary knowledge in local rules.
Mediation is also an option for couples who would like to avoid extensive litigation. A mediator can help spouses come to a resolution that is fair for both parties.
Plan for pensions
Pensions can be a particularly thorny issue in divorce. Every pension has unique and specific rules that must be weighed. If the legal process surrounding a pension is not managed correctly, there can be serious consequences. For example, in some states, it is not possible for a former spouse to collect their due funds after the other spouse passes away. Therefore, splitting a pension must be handled with care.
Weigh every possibility
Finally, you should be sure to carefully consider every option that is available to you regarding the division of assets from a retirement fund. With accounts such as pension plans that have long-term rewards, a fifty-fifty split in the present day may not be the most financially beneficial solution for either party. Couples should consider every option to find the answer that is most rewarding for both spouses.