Divorce is expensive in many cases, and the process of dividing marital property can further diminish the resources that each spouse has access to.
Particularly when someone is in their 40s or later at the time of a divorce filing, they may worry that the end of their marriage could have dire implications for their retirement and financial stability later in life. How can someone preparing for divorce in Virginia ensure that the end of their marriage does not derail their plans for their golden years?
Through careful negotiations
Sometimes, spouses have completely different goals for divorce proceedings. While one spouse may want to preserve as much of their retirement account as possible, the other may worry primarily about the marital home or a family-owned business. People can sometimes negotiate specific terms with their spouses that allow them to settle property division matters without diminishing their retirement account. To do so, it is usually necessary to offer other resources of similar value to the spouse giving up their interest in a retirement account. Determining the value of the marital portion of the retirement account can help someone better prepare for negotiations.
With the right paperwork
Sometimes, both spouses desire a portion of the retirement account, and therefore dividing it becomes necessary. People may worry about taxes and the possibility of paying a 10% penalty on the amounts withdrawn from the account before they reach retirement age. Thankfully, it is possible to split even tax-deferred retirement accounts when people follow the correct procedures and paperwork. Properly drafting and submitting the right documents can lead to the division of retirement savings into two separate accounts without any penalties or additional tax liabilities.
As a final note, those preparing for divorce, especially later in life, may need to reevaluate their retirement plans. They could make changes to their plans to reduce their costs or continue working to replace retirement funds that they must share with their spouse.
People who worry about property division matters in an upcoming divorce often need help planning the best strategy to achieve an optimal outcome. As such, seeking personalized legal guidance is generally wise. Additionally, identifying the resources that matter the most before beginning divorce negotiations can help improve the outcome of divorce for many people.
