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Retirement plans are difficult to divide in a divorce

On Behalf of | May 11, 2016 | Divorce

California couples who are ending their marriage should approach the situation wisely and calmly. As they return to single life, it will be necessary for them to plan for their financial future. Intelligent steps before and during the process can make an enormous difference and can have positive effects on the divorce experience as a whole.

Dividing marital property is often contentious, but the situation takes on an even greater degree of complexity when assets such as retirement plans are taken into consideration. Determining the precise worth of a retirement plan well enough to divide it is often a difficult task.

Retirement plans fluctuate greatly in their monetary value. They may have a specific worth in the present moment, at the time of the divorce, or they may be worth inestimably more in the future. They are variable with occupation, as people in the military or public service may have remarkably generous retirement plans while people in other jobs may have a small one. Estimating the exact value of the retirement plan is essential for the division of marital property.

A family law attorney who is representing a divorcing client that owns a retirement plan will sometimes suggest that in lieu of having to obtain a valuation and a qualified domestic relations order, the client should agree to give up other marital assets of comparable value in exchange for retaining full ownership. This can take place during the negotiation of a comprehensive settlement agreement that, once signed, can be submitted to the court for its approval.

Source: The Street, “Marriage Going Bust? Protect Your Retirement Plan From Going Bust, Too”, Thomas Scarlett, May 6, 2016