In a divorce, one of the most critical issues that must be settled is the division of assets and property. When thinking about this task, divorcing couples usually think about automobiles, real estate properties, jewelry, art, and other valuable tangible items. However, there are other assets to consider, as well. One of them is retirement accounts. These accounts can be difficult to split in a divorce due to certain tax implications and the nature of the account. You will need the expertise of a knowledgeable divorce attorney and possibly a financial advisor to determine how your retirement accounts should be handled at this time.
Under Virginia laws, a divorcing couple’s marital property will be subject to the process of equitable distribution. Property that is not part of the marriage can be kept by the spouse that owns it. Unless you have a valid prenuptial agreement that determines how retirement accounts are to be handled in your divorce, your spouse likely has some claim to them.
If the retirement account was started after the date of the legal marriage, it is considered marital property. If it was opened before you got married, but the other spouse has contributed money to it since the marriage, some of the money will be categorized as marital property. When it comes to property division and retirement accounts, you likely have many questions that can be addressed by a skilled divorce attorney.
As long as they are filed correctly with the courts, divorcing spouses are not expected to pay taxes on the immediate division of retirement accounts. Therefore, it is even more imperative that you hire an experienced divorce lawyer to help ensure everything is filed correctly.
Depending on the circumstances, your spouse may receive some, all, or none of your retirement account. To comply with the divorce order, you must access these accounts. Divorce is one of the times you can tap into an IRA or 401(k) before retirement and have no tax liability. If the judge awards a portion of your account to your spouse in the divorce settlement, you will not owe taxes on it.
One essential but often-forgotten step divorcing couples need to take with their retirement accounts is to update their beneficiaries. With everything else going on, it is an easy step to overlook. However, it can substantially impact the lives of your children or other family members in the event of your death. If you forget to change beneficiaries, your retirement money could be given to your ex-spouse instead of your children or other parties you would have granted it to.
Lack of attention to detail when it comes to retirement accounts in divorce can make the divorce process much more complicated and expensive than it needs to be, especially if large amounts of money are involved. When you hire a divorce lawyer at Mahoney & Richmond, PLLC, you can be assured that you are hiring a professional that has the knowledge to effectively address your questions and take care of what needs to be done. Contact us today to schedule your divorce consultation.