Divorce can be one of the most hectic things you can ever experience in your life. It can be both emotionally and physically draining, especially when it comes to the splitting of assets. Assets range widely and include real estate, investments, savings, and pension funds.
Retirement savings are among the things couples invest in to ensure that they don’t experience financial difficulties during their old days. However, it can be devastating when your marriage is falling, and you have no other option but to divorce. When this happens, you are required to split these benefits with your spouse, fairly.
Basically, any pensions you earn while in marriage are legally considered as a joint asset which is subject to splitting if divorce ever comes up. Here are some tips that will ensure that your pension benefits are protected, even after separation from your partner.
Be Aware of The Rules
The assets division rules vary from country to country, and retirement schemes also differ. However, it is critical to ensure that you are well conversant with the rules governing your retirement benefits and assets division, even before filing for the divorce.
Make sure you are well aware of your rights, entitlements, and any other rules that may be outlined in your retirement plan. Seek the help of a professional to help you in case you are stuck.
It is vital to be aware of the procedure to follow during the retirement assets division. Failure to follow the rules may lead to you receiving nothing from the retirement plan despite any other agreement made there before. Ignorance can lead to costly mistakes, that could have otherwise been avoided easily.
Address Existing Debts
During a divorce, any debt related to the pension/retirement plan is considered as a joint liability. If one spouse took up a loan from the retirement plan and is not settled by the time of the divorce, the remaining balance will be split between the participant spouses.
Unless the divorce decree states, otherwise, a debt obligation is shared by both parties. In some cases, the decree may require the debt to be settled before the division of retirement assets.
Prepare to Share Your Retirement Benefits
It is critical to psychologically prepare yourself that your marriage can fall apart and that it may result in a divorce. In case of legal separation, QDRO qualified domestic relation order will be used during the splitting of your retirement assets.
Your spouse is also entitled to any retirement benefits that you have. If no legal issues are restraining your spouse from receiving their pension benefits, you will be required to split the benefits 50-50. Ensure you are familiar with such occurrences happening to avoid the emotional turmoil that arises from divorce.
Update Beneficiaries
Upon receiving your assets from the qualified plan and any other financial benefits such as life insurance and annuities, ensure you consult an attorney who will assist you in adding other beneficiaries to your assets. In case you remarry after divorce, your children will be in the front line as your beneficiaries, or you can add any other person you deem suitable. The attorney will assist you in allocating your assets in accordance with your will.
Apart from being psychologically draining, divorce can also be financially draining if you aren’t careful. During the process, it is crucial to be keen and pay attention to even the little details. Failure to be keen can cost you all the assets that you’ve worked for most of your productive life. As much as a divorce can be ugly and troublesome, the last thing you want is to lose your hard-earned cash. Follow the above processes to ensure that your financial matters are well taken care of.
