In some cases, a divorce is amicable and dividing assets including money is done fairly. However, should you find yourself in the midst of divorce disputes you may be feeling your own financial assets are at risk. It’s likely that you did not take steps to protect your retirement account from your spouse because you didn’t go into the marriage assuming you’d need to do so. Since your retirement account is one of your most valuable assets, it’s important you understand how to protect it and not have to split it with your ex-spouse.
At least part of your 401(k) is open to a claim by your soon-to-be-ex spouse unless you have a prenuptial agreement in place. If you don’t and can’t agree outside of court, the court will decide how to divide your retirement savings. The general rule of thumb is your spouse can stake a claim to any money that was added to the account during your marriage.
At the same time, you may have a right to your spouse’s 401(k). You are eligible to this if you contributed to her or his account during your marriage. It’s important that you are always 100% honest regarding your assets. Should a judge believe you are hiding assets, they may award more money to your spouse because you were not forthcoming.
The easiest way to do this is to bypass court and negotiate with your spouse. This usually works if you still have an amicable relationship, however it’s common for financial discussions to become difficult quickly in a divorce. This process has advantages because it takes less time and is not open to the public. Keep in mind this agreement is subject to the approval of a judge. Following this process gives you more control because you do not have to abide by strict legal procedures.
Your attorney can help facilitate these conversations, or if you are choosing to do mediation, you can discuss this with your spouse and decide how to handle your individual assets.
**Disclaimer: The content used in the article is not to be used as legal advice and is for illustration and general informational purposes only. If you have questions about your particular situation, please contact us to schedule a consultation with one of our experienced attorneys.