Divorce negotiations seem to focus first on issues like alimony, child support and child custody. If and when the discussion turns to property division, bigger items like the family house and personal property might dominate. Although specific legal procedures apply to the division of retirement assets, it seems that this type of asset often gets second billing.
Although retirement assets and securities may never take priority over more heated divorce topics, it is important not to forget them. Indeed, this category of assets can represent substantial wealth. As a community property state, Arizona law holds that a divorcing spouse is entitled to a 50 percent share of all assets in the marital estate.
Yet determining an equal split of retirement assets like stock options, pensions, deferred compensation plans, 410(k) plans, and other securities can be a complicated process. This is where the assistance of an experienced divorce and family law attorney can be invaluable.
Short- or long-term tax implications must be considered in order to make an informed decision. An extra requirement, called a Qualified Domestic Relations Order, applies to any divisions of employer-based retirement plans, such as 401(k) assets. A QDRO is a court order instructing the plan administrator how to divide the assets pursuant to the divorce settlement agreement.
An attorney can also help divorcing parties plan for unexpected contingencies. For example, it may be wise to take out life insurance on your soon-to-be former spouse, as a safeguard against that spouse’s premature passing before support obligations have been finalized. Our Arizona divorce law firm can help protect your interests in these and other divorce negotiations.
Source: Forbes, “Divorcing Women: Don’t Lose Out On Funds You’re Entitled To,” Jeff Landers, Dec. 7, 2016