One of the scariest things about divorce for many spouses is not knowing what’s going to happen to their valuable assets such as homes, cars, jewelry and collectibles. If a couple shares investment accounts, though, then this can take their concerns to a whole other level. There are a few steps that you’ll want to take if you and your soon-to-be ex share a valuable investment portfolio.
You and your ex have two primary options if you have investments such as a 401(k). One of you can keep it while the other spouse retains other, equally valuable property or you can decide to split up the account. If you decide to pursue the latter, then you may want to consider getting a Qualified Domestic Relations Order (QDRO).
A QDRO serves the role of outlining how you and your ex plan to split up an investment account. It can make it easier for your Williamsville judge to enforce their orders if you have a QDRO in place. The court can simply reference what you agreed to and order that you abide by it.
Many spouses decide to get a QDRO for taxation reasons though as well. If you have a 401(k) and make a withdrawal from it before a certain age, then you might be subject to tax penalties for doing so. This can significantly decrease the amount contained in it. The QDRO can protect you from this.
If you have an individual retirement account (IRA), then you may not need a QDRO. You’ll be able to avoid many of the tax penalties you’d otherwise have to pay by transferring the funds contained within it instead of distributing them.
Financial matters can be difficult to address during a divorce, especially when emotions are running high. This is why you’ll want to make sure that the attorney you have advocating for you here in New York is well-experienced in negotiating settlements of complex assets such as investment accounts handling your case.