fbpx skip to Main Content
divorce and ret

How to Protect your Retirement Assets in a Divorce

divorce and ret

How to Protect your Retirement Assets in a Divorce

Divorce and retirement are not far-apart conversations in today’s world. Divorce can be an emotionally tumultuous time due to the effort demanded going into the division of financial and physical assets. Key assets that are often targeted during these proceedings include pension and retirement plans; this happens especially in circumstances where a spouse without work has no savings to fall back on.

Understanding the Terms of your Retirement Plan

A large percentage of plans and accounts follow specific procedures that must be followed when dividing retirement assets in a divorce. Failure to follow these rules can result in the forfeiture of some or all of your assets.

Most pensions offer some form of survivor’s benefit. There are scenarios where the ex-nonworking spouse may opt to retain this benefit. In other cases, the actual monthly benefit is divided between the spouses, and the survivor benefit may be waived, retained, or transferred depending upon the divorce decree.

The nonworking spouse may also come out ahead by waiving the survivor benefit and having the other spouse purchase a life insurance policy naming them as a beneficiary. This can be especially prudent if the survivor benefit halts upon the remarriage of the nonworking spouse before a certain age.

Steps to Take Before Divorce Proceedings

Getting divorced or even considering divorce is when you should really start contemplating how your retirement assets will be divided. The following steps can help possess or secure your fair share of retirement plan assets during the divorce proceedings.

Do your research – Those with an understanding of the general rules of how plans are divided are better prepared to assess whether they get or retain what they should. Spouses who do not participate attain the right to obtain complete information about all retirement plan balances or account balances that the other spouse owns. They should be granted access to current statements on all assets, retirement or otherwise, that are eligible for division. Any debt within a retirement plan is often considered to be a joint obligation.

Get professional representation – Dividing the rest of your marital assets is relatively straightforward, however it is probably wise to at least consult an attorney to review the division of retirement assets. Divorcing spouses who are uneducated in these matters are subject to losses in some cases as a result of ignorance of how pensions and other retirement assets work and which payout options may be the best for both sides even when they are divided.

Stay on top of paperwork – Send all court orders and divorce agreement documents to plan and account custodians as soon as possible. Any delay in doing this may lead to the forfeiture of what is due to you because your paperwork is outdated and invalid. It is still crucial to submit this paperwork before any of the plan or pension assets are distributed, not doing this will leave you subject to trying to recover those assets yourself, incurring further legal fees and bureaucracy.

Don’t overlook survivorship – If your ex gets a pension that you are dividing, ensure that you are listed as the survivor or beneficiary on the plan in order to continue to collecting benefits if they die. Attain knowledge on the forms that need to be signed and then make copies of them to store safe place for future reference.

Conclusion

Several important elements go into the process of the allocation of pension benefits between spouses. Pension earned while the divorcing spouses were still married is considered joint property and is subject to division in a divorce. That said, there are several ways that current or future benefits can be divided. It is important to consult your legal counsel and pension provider to ensure that you know what to expect where divorce and retirement is concerned.

Divorce and retirement are not far-apart conversations in today’s world. Divorce can be an emotionally tumultuous time due to the effort demanded going into the division of financial and physical assets. Key assets that are often targeted during these proceedings include pension and retirement plans; this happens especially in circumstances where a spouse without work has no savings to fall back on.

Understanding the Terms of your Retirement Plan

A large percentage of plans and accounts follow specific procedures that must be followed when dividing retirement assets in a divorce. Failure to follow these rules can result in the forfeiture of some or all of your assets.

Most pensions offer some form of survivor’s benefit. There are scenarios where the ex-nonworking spouse may opt to retain this benefit. In other cases, the actual monthly benefit is divided between the spouses, and the survivor benefit may be waived, retained, or transferred depending upon the divorce decree.

The nonworking spouse may also come out ahead by waiving the survivor benefit and having the other spouse purchase a life insurance policy naming them as a beneficiary. This can be especially prudent if the survivor benefit halts upon the remarriage of the nonworking spouse before a certain age.

Steps to Take Before Divorce Proceedings

Getting divorced or even considering divorce is when you should really start contemplating how your retirement assets will be divided. The following steps can help possess or secure your fair share of retirement plan assets during the divorce proceedings.

Do your research – Those with an understanding of the general rules of how plans are divided are better prepared to assess whether they get or retain what they should. Spouses who do not participate attain the right to obtain complete information about all retirement plan balances or account balances that the other spouse owns. They should be granted access to current statements on all assets, retirement or otherwise, that are eligible for division. Any debt within a retirement plan is often considered to be a joint obligation.

Get professional representation – Dividing the rest of your marital assets is relatively straightforward, however it is probably wise to at least consult an attorney to review the division of retirement assets. Divorcing spouses who are uneducated in these matters are subject to losses in some cases as a result of ignorance of how pensions and other retirement assets work and which payout options may be the best for both sides even when they are divided.

Stay on top of paperwork – Send all court orders and divorce agreement documents to plan and account custodians as soon as possible. Any delay in doing this may lead to the forfeiture of what is due to you because your paperwork is outdated and invalid. It is still crucial to submit this paperwork before any of the plan or pension assets are distributed, not doing this will leave you subject to trying to recover those assets yourself, incurring further legal fees and bureaucracy.

Don’t overlook survivorship – If your ex gets a pension that you are dividing, ensure that you are listed as the survivor or beneficiary on the plan in order to continue to collecting benefits if they die. Attain knowledge on the forms that need to be signed and then make copies of them to store safe place for future reference.

Conclusion

Several important elements go into the process of the allocation of pension benefits between spouses. Pension earned while the divorcing spouses were still married is considered joint property and is subject to division in a divorce. That said, there are several ways that current or future benefits can be divided. It is important to consult your legal counsel and pension provider to ensure that you know what to expect where divorce and retirement is concerned.

Back To Top