Lists are helpful. This is especially true when going through a complex process like divorce. For those who make lists to help guide themselves through these types of processes, the "things to split" during divorce list may look something like this:
- Come up with a child custody arrangement
- Propose a child support amount
- Figure out how to split the family home and vehicles
- Calculate value and split for savings accounts
Although these are all important areas that deserve discussion, one extremely important point in the list is missing. This missing point is an asset, an asset that is likely one of the largest owned by the couple. Yet, it is not uncommon for this asset to fall between the cracks during the asset division determination portion of the divorce proceeding.
What is this asset? Retirement accounts. Retirement accounts are often one of the largest assets in the couple's possession. These assets can get forgotten because they are not in use. Their impact is not immediate.
However, the value of these assets often accrues. These assets are generally considered marital property and are subject to division during divorce. As noted in a recent piece in Forbes, it is important to navigate the split of retirement assets wisely since determining the true value of these accounts and how to go about executing a split are complex matters.
Why is splitting retirement during divorce complicated? Some couples avoid diving into the complex nature of this asset and try to keep it simple. Although it may be tempting to give one partner the home and the other the retirement assets and call the split even, such a split is not wise.
In addition to the fact that these assets generally grow until reaching retirement age, some require the use of a Qualified Domestic Relations Order (QDRO). Without this court order, you may not receive the agreed upon payment. A divorce settlement is not enough, the administrator of the plan may require this specific document before a payout can be made.
How can I make sure I get a fair share? Determining the best split for a divorce requires more than just the basics. The list above helps, but a more thorough review of all assets and legal issues, including retirement assets, is needed. As such, it is often wise to seek legal counsel to better ensure your interests are represented.