Going through a divorce takes its toll on everyone involved; not excluding the kids, family members, and even friends bears the brunt of the stress and pain. With child custody battles, it becomes an even more heated process.
During this period, the division of your retirement accounts comes into question, and you’re likely to wonder what happens to your 401(k)s. If you and your spouse have yet to agree, it becomes a complicated situation requiring sound legal guidance.
How 401(k)s are split during a divorce
For a start, remember that funds contributed to the 401(k) account during the marriage are marital property. Therefore, it is subject to division upon divorce unless there is a prenuptial agreement.
For instance, if you were married for five years and contributed $100,000 to your retirement account, your spouse is likely entitled to 50% of the share unless you’re in an equitable distribution state like New York.
In that case, the court will divide property and marital debt using the state’s equitable distribution laws.
Protecting your 401(k) in a divorce
Unfortunately, if your ex-spouse is entitled to a portion of funds in your 401(k), there isn’t much you can do other than negotiate with other assets of equal value. If your ex agrees, your 401(k) will be safe.
A common mistake people make during a divorce is assuming that the entire 401(k) balance is subject to division. However, you can protect your contributions on your 401(k) account before getting married.
By obtaining copies of past statements, your attorney can help you determine which portion of your 401(k) is classified as marital assets.
Your designated beneficiaries
By default, your spouse is designated as a 401(k) plan beneficiary, even after divorce, unless the beneficiary signs their right away. To protect your 401(k), it is vital to have your ex-spouse sign away their beneficiary rights during the divorce.
It will ensure you don’t look for your ex months or years later to have them sign their rights away. If you fail to change your designated beneficiary until your demise, your ex-spouse will be getting proceedings from your 401(k), which might be against your wish.
Work with an experienced attorney
The best way to protect your 401(k) during a divorce in Staten Island is to get in touch with an experienced attorney. For the past few decades, we’ve been helping our clients protect their interests through sound legal advice and representation, and we can help you tool. So feel free to call us or fill out our contact form to book an appointment.