Getting a divorce can be extremely stressful, and a big part of that stress has to do with finances.
The good news?
If your divorce is done intelligently, you can minimize the damage done and protect your assets.
The Reality of Splitting Your Retirement in Divorce
There is no way around it, unless you trade something of roughly equal value (say your ex gets the house and you get to keep your retirement in full), you will need to divide your retirement savings.
You will need to compromise, and there will be tradeoffs. A divorce attorney who tells you otherwise is going to lead you on a long and very expensive litigation journey.
Top Ways to Protect Your Retirement Assets
Pay to Assess Your Case at the Beginning
The best advice I can offer? Spend the necessary money to adequately assess your case at the beginning. That might mean you pay for a review of a pension’s present value for the purpose of division or buyout. Or this might mean that you pay for an analysis of cash versus division of the retirement asset(s).
This will reduce the chances of a mistake being made that will haunt you down the road. It will also help you determine if it makes sense to horse trade assets to avoid carving them up (and avoid the attorney’s fees that go along with it).
Smart decisions early in the divorce process will help to protect all of your assets, not just your retirement.
Settle Outside of Court
Figure out what your rights are, review your assets and debts, and then settle your case out of court. If there is mutual respect between the parties, even if they don’t like each other, the financial harm that can come from divorce can be greatly reduced.
Successful settlements are built on a rigorous and intelligent cost-benefit analysis. A good divorce attorney helps with those analyses.
Consult with Professionals
Don’t be afraid to speak to several divorce attorneys in your area to get a feel of their approaches to handling family law cases. If you want your divorce to be as painless as possible, find an attorney that is committed to helping you keep your divorce civil while also protecting your rights and interests.
It is also critical that you consult with your retirement plan administrator to make sure you follow all the rules for division. You don’t want to accidentally trigger a taxable event or suffer penalties. It also helps to keep in close contact with your financial planner.
Don’t Fight Just to Be Right
Don’t cut off your nose to spite your face. The more you argue (even if you are right), the more money you are going to spend. There are many clients who will go through all of their life savings just to prove that they are right. Set your post-divorce life up for success by swallowing your pride and refusing to spend money just to prove a point.
Already Divorced & Retirement Accounts Suffering? Here’s What You Can Do
Talk to a financial planner. Some individuals don’t know what to do with their assets after they obtain them post-divorce, particularly if the other spouse was the one handling the finances. A financial planner will take a tremendous load of your shoulders and help you to put your money where it will yield the best return.
Divorce can be costly, but if done intelligently you can protect your assets and come out a stronger person
