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Protecting your retirement accounts in a divorce

On Behalf of | Aug 4, 2023 | Property Division |

Property division is one of the most complicated aspects of most California divorces and is often what results in the most anxiety.

Dividing smaller property, such as vehicles or household items, is usually simple enough. But when it comes to larger assets that have long-term value, such as your retirement accounts, you want to make sure you take the right steps to protect them in your divorce.

Divorce is a highly emotional process, and being in a heightened emotional state when making major financial decisions is sometimes a recipe for disaster.

It is important to use resources to help you manage the different aspects of your life during your divorce. Having a clear, logical head is essential when you are negotiating property division with assets such as retirement accounts.

Marital versus separate property

The first step is to identify your retirement accounts and classify them as marital or separate property. Generally, marital property is property that was acquired during your marriage, while separate property is property you owned before the marriage.

Only marital property gets divided in a divorce. Therefore, if you had your retirement account before you got married, it could be considered separate property, meaning you keep all of it.

However, any increase in the balance of your retirement account during your marriage is marital property. The amount of the increase is measured from the date of your marriage to the date of your separation. This is why determining an accurate date of separation is so important.

For example, if your retirement account was $100,000 when you got married and it was $150,000 on your date of separation, $50,000 is considered marital property, and you will most likely divide that amount with your spouse.

Qualified domestic relations order

Once you decide on how your retirement accounts will be divided, you must ensure you use the right document to split them. Many retirement accounts require a special form, called a qualified domestic relations order, to split the account.

Not having the right form or completing the form incorrectly could cause problems, and you may incur extra fees or costs. It is usually best to have professional help right from the start.


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