When a couple divorces, any assets that are considered to be marital assets are divided. This means that even items that are in one person’s name, such as a retirement account, may be split up when a marriage ends. If assets from a retirement account are to be doled out during a divorce, a Qualified Domestic Relations Order will be created.
The QDRO outlines how assets from a retirement account should be dispersed. Retirement assets normally only go to the owner of the account or a named beneficiary. In addition, there are normally penalties for early withdrawals. When funds are dispersed through a QDRO, however, they can go to a person who isn’t named as a beneficiary, such as an ex-spouse or a child.
It’s important for a person to consult a financial analyst if they are getting a divorce and may be giving up assets from a retirement account. There are a number of pros and cons to holding on to funds from a retirement account compared to other assets. If a spouse doesn’t seek the most beneficial property, they may give up liquidity or hold on to assets that could lose value over time due to expenses or fees.
Asset division can be one of the most contentious parts of a divorce. Along with the emotional attachments people may have to property, there’s also the fact that people are concerned about what their lifestyle will be like after their marriage ends. The assets that someone chooses can have a significant affect on how well they are able to manage. A lawyer could help a client determine which assets may be the best to pursue.
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