Whether your marriage has lasted for five years or for 25 years, you probably have thought about retirement and you may have even created a plan with your spouse for those golden years. Now you are going through a divorce in Alameda County and you probably are assuming that those retirement plans and bank funds are off-limits, especially if they are through your spouse's employment or under your spouse's name. However, according to Forbes, that simply isn't true.
Pensions and retirement can be marital property
It is easy for many to fall into the trap of thinking that employment benefits are the separate property of the employee spouse. However, think about your contributions to the marriage. Even if you didn't work, you probably have cared for the house, taken care of the children, paid the bills and handled other matters so that your spouse can pursue their career goals.
Since California is a community property state, this means that everything you and your spouse own is split directly down the middle. The only exception would be if you had signed a prenuptial or postnuptial agreement. Therefore, if you and your spouse have accumulated any of the following, then you likely have a legal claim to them:
- pensions
- 401K
- IRA account
- Stock options
- Profit-sharing plans
- life and long-term care insurance policies
Again, there may be some exceptions. For example, if your spouse started a 401K before the marriage, then that money may be considered separate property but any money accumulated during the marriage might be claimed as marital property.
Avoiding tax issues and other legal problems
Retirement plans and pensions can be difficult to split in a divorce proceeding since there are often penalties and taxes to pay if money is removed from the accounts prematurely. Forbes suggests that one way to avoid such issues to get what is called a Qualified Domestic Relations Order. The QDRO provides clear instructions to the holder of the pension or account how the funds are to be made available to you. The order should be prepared by someone who is qualified because if done improperly, it could affect you financially.
Another way to ensure that your future is protected is to make sure that your divorce settlement is very clear in what you are awarded. This is going to require some work because pensions and different retirement plans have different rules and these rules need to be followed. If your spouse is in the military, has worked for a county, a city, a state or federal government agency, then you will have to find out what your rights are. If you are going through a divorce, you should talk with an experienced attorney who can help you plan for your future.