The Pew Research Center reports that the divorce rate for seniors throughout California and the rest of America is twice what it was during the 1990s. While it is important that all couples know how to properly divide their retirement assets and other types of properties, the process is especially important for older couples who may not be able to recover from mistakes that can result in hefty tax bills or substantial financial consequences.
To properly divide 401(k) plans and pensions, a qualified domestic relations order may be required. A QDRO is a legal order that specifies a divorced spouse’s right to have a portion of or all of the accountholder’s qualified plan. After the judicial decree is given to the plan administrator, the specified portion of the plan can then be transferred into the ownership of the divorcing spouse.
Individuals who have employer pensions should verify whether or how their pensions can be split, as employers tend to have varying rules on the division of pensions. It will also be necessary to hire a professional to appraise the pension before it can be divided, a process that can take up to almost three months to complete. Individuals should refrain from establishing terms for dividing their pensions until they have the information that verifies how much it is worth.
For IRAs, it will not be necessary to obtain QDROs. The manner in which IRAs are to be divided should be specified in a separation agreement or a divorce decree, which should then be submitted to the custodian of the IRA.
A family law attorney may help a client resolve disputes regarding divorce legal matters, such as the division of financial assets. The attorney may engage in litigation to ensure that the interests and rights of clients are protected.