As employees near retirement in California, they may also be faced with having to file for divorce as a result of irreconcilable differences with their spouses. When getting a divorce, it can be easy to overlook critical details. Several areas require attention during this type of family law proceeding in order to retain as many assets as possible, thus potentially having a more financially secure retirement.
Making the transition from married to single can be shocking for a person who has been married for years or even decades. When people who are middle-aged or older dissolve their marriages, they might be worried about their spouses claiming a portion of their retirement benefits and other valuable assets. Losing this money can feel like salt in the wound at a time when one’s living expenses will increase due to the fact that he or she is now single.
With proper financial and legal guidance, a person can ensure that the final divorce settlement reflects his or her wishes and needs. When retirement plans and pensions are on the table, it is helpful to understand how having these assets will affect one’s financial situation a year or 10 years from now. It is also helpful to understand which assets can be taxed, such as alimony or a 401(k), and how to minimize one’s tax liability following a divorce.
If a prenuptial or post-nuptial agreement was executed by a couple, then this can be immensely helpful in determining how the couple’s property should be divided according to the parties’ wishes. If there is no such agreement and one’s retirement plan — or any part of it — is considered community property rather than separate property, then the retirement plan will be divided in half according to California statutes. One’s retirement plan will be excluded from the divorce negotiations only if it is deemed to be separate property. Two divorcing parties in our state have the right to fight for their best interests when planning for their futures and for retirement following a divorce.
Source: Tampa Bay Times, “Late-in-life divorce perils retirement plans“, , June 27, 2014