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Retirement assets might be overlooked in divorce cases

A common way to prepare for divorce is to catalogue assets that were acquired during the marriage, and then consider which assets each person wants. Spouses in Greenville, North Carolina, might benefit from aggressively going after retirement assets in their partner's names, something that many people don't pursue. In fact, a survey of 546 divorcees conducted by Securian Financial Group found that 31 percent of participants were unaware that spouses can seek retirement benefits in a divorce.

With some exceptions, retirement assets deemed marital property regardless of who name is on account is eligible for distribution in a divorce settlement agreement. A legal document called a Qualified Domestic Relations Order even allows the tax-free transfer of assets between spouses' retirement accounts. An exception is money that was in a 401(k) before a person got married. In some cases, however, money put into a 401(k) during a marriage is subject to property division, but withdrawals might be taxed. Instead, spouses should try to get a share of a Roth 401(k) because those are funded by money that had already been taxed, meaning that withdrawals won't be. The same holds true for a Roth IRA.

Another tip that applies to people married for at least a decade and who are 62 years of age or older is to ask for Social Security benefits. Spouses might be entitled to up to half of their former partner's benefits, and this won't affect the amount their ex receives.

Making smart decisions about the assets one pursues could lead to a settlement that offers more long-term benefits. An attorney could offer assistance, such as advising people which assets they qualify for under North Carolina law as well as completing legal documents like Qualified Domestic Relations Orders.

Source: Forbes, "The Big Money Mistake Divorcing Women Make", Kerry Hannon, July 03, 2014

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