January 01, 2014 /24-7PressRelease/
-- How to prevent income and investment loss during divorce
The thought of getting a divorce can be extremely stressful. The reality of facing the loss of time with one's children, potential change in living location and conditions and the loss of income can leave Houston couples feeling compromised and vulnerable.
Residents have long known the challenges inherent in divorce and the need to take care with each decision that is made. Protecting retirement assets
has become a cornerstone of many modern divorces and is something that has an impact on people's livelihood for many years. Luckily, there are some relatively simple ways to keep as much of one's investments intact during a marital split.
Understand the process for distribution of funds
Even if your divorce decree clearly outlines which spouse is to receive which portion of a given retirement account or pension fund, you still have additional guidelines to follow to prevent undue taxation or penalty assessment.
This may mean ensuring that any transfer of funds is processed at a specific time or with a certain number of days before or after a designated event or it may mean utilizing the proper forms for such transactions.
If the proper method for these types of transfers is not followed, your transaction could be viewed as an early withdrawal by the IRS, meaning that you will unnecessarily lose a good portion of your investment to taxes and early withdrawal penalties. Do not financially punish yourself by making uninformed decisions.
Make friends with the QDRO
A Qualified Domestic Relations Order, or QDRO, is your best way to make sure that tax agencies view your financial transactions as part of your divorce settlement
. There are some times in which the use of a QDRO is required but you may even use it when it is not required.
The QDRO could be looked upon as a bit of an insurance policy as you may not need it but if you do, you will be very glad that you used it. Avoiding questions from tax authorities is yet another way to save you time and money during the divorce process and simplifying the entire experience.
Choose your professional help wisely
Sometimes it really can be the little things that make a difference but it is not always possible to know the small details on your own. That is why making a wise choice in your legal counsel during a divorce is so critical. It is not only a matter of where you will live and what your income today is like but also can affect your future and retirement possibilities.
Article provided by Vernier & Barry, P.C.
Visit us at www.vernierlawfirm.com