January 17, 2014 /24-7PressRelease/
-- New Jersey couples who are faced with the prospect of a divorce can feel overwhelmed at the many facets of their lives that may change. The loss of one's lifelong dreams is hard enough and when the loss of belongings or assets is added to that, the challenge can grow. Such is the situation that makes property division
during a divorce so difficult.
With more Americans increasingly savvy about the need for and ways to properly invest and plan for retirement, the need to divide retirement accounts
in a divorce is becoming a common component of many divorce proceedings.
The need for great care is real
While splitting accounts may seem like it should simply follow what is outlined in a divorce decree, the reality can be quite different. There are many special laws and processes that must be followed. If they are not, a good portion of some funds can be lost to taxes or penalties.
This is because any transaction is at risk of appearing to be a crafty way for a person to take early distribution. Care is needed to ensure that tax agencies and other parties understand clearly that a transaction is simply a part of the divorce settlement.
Some of the ways that you can avoid the unnecessary loss of your retirement funds include:
- Use of the QDRO: A Qualified Domestic Relations Order is a means by which you can guarantee that your financial dealings are clearly seen as simply a division of property during your divorce. This can be required by law for select transactions but is also able to be utilized for those transactions that do not require it and it is always helpful to do so.
- Watch the calendar: For certain accounts, you are only allowed to transfer funds within a very specific timeframe. Simply because your divorce decree has been entered does not necessarily mean that you can process fund transfers right away. You may need to wait until a certain date otherwise you will be penalized.
- Divide in percent, not dollars: Make sure that you agree on what percent of an account that each spouse will receive from the fund, not specific dollar amounts. This ensures that each person will receive the proportionally correct amount even in light of market and valuation changes.
Paying the taxes and penalties that can be associated with all-too simple mistakes can have you see a large portion of your hard work and investments evaporate needlessly.
Get professional counsel
It is important that you ask an attorney about his or her approach to managing and preserving your retirement assets during a divorce. Making sure that your legal counsel looks out for you on all levels is one of the most important things you can do to make divorce less painful.
Article provided by Bergen-Passaic County Divorce Lawyers
Visit us at bergenpassaicdivorcelawyer.com/