When getting a divorce, investment and retirement accounts are typically afterthoughts. In reality, these accounts could hold thousands of dollars that need to be carefully divided. Accounts and their contents require a careful examination before a "fair" division can be determined. Many retirement accounts have their own rules on tax treatment and access to the money. Investments can have different tax liabilities which will have a large impact on how they are divided at the time of divorce.
When dividing retirement and investment accounts, the Wall Street Journal suggests that you should be fully aware of what you own. Couples need to make an inventory of their investment holdings, including all joint or individually owned accounts. They shouldn't forget any older accounts, stocks, or bonds as every account can become a point of contention later on. In some cases, it may be wisest to hire a forensic specialist to locate every single account, especially if your finances are widely spread.
Also, you will want to weigh all dividing retirement accounts. Spouses can't simply walk away from their marriages with money in their own IRAs and 401(k) plans. It is also possible as part of a divorce to transfer some of those assets from one spouse to the other without any immediate taxation or penalty, so you will want to talk with your lawyer to see how these different arrangements will affect you.
You will also want to be diligent with your investments after the divorce and make sure that every detail that was discussed is executed properly. Otherwise, huge sums of money could end up with the wrong party. For example, when arranging for the division of a Qualified Domestic Relations Order you will need to have a plan administrator approve the transfer before it can take place. Read more about this on the blog today and hire a Los Angeles divorce lawyer if you want to carefully arrange the division of your investments.
