With almost one million divorces happening in the United States every year, there’s a chance that one day, you might find yourself looking to part ways with your spouse. While getting out of a relationship that’s not fulfilling may sound like a positive move, a lot of the tricky logistics that come with it will feel anything but positive.
Among the biggest snags that many couples face when uncoupling is how a spouses’ retirement money is going to be split up. That issue makes for the foundation of this blog post on 401k divorce advice.
Below, we share four tips that top divorce lawyers advocate when counseling clients through retirement-related separation problems.
1. Try to Get Ahead of the Problem
If you have a sizable retirement bankroll and are getting married, it may pay to put a prenuptial agreement in place before saying your vows. A prenuptial agreement allows partners to come to agreements on how assets will be treated should a divorce ever occur. With that agreement in place, you may be able to protect your savings.
Some states, depending on your relationship, may not allow you to safeguard certain assets from your spouse, even with an agreement in place. Still, this option may be worth exploring.
2. Offer Property Rather Than Your 401k
A common piece of 401k divorce advice that lawyers may offer to those not wanting to part with their savings is to part ways with other assets of similar value. For example, if you’d like to keep one million dollars in savings, you may be able to offer your spouse close to that much in property in exchange for him/her agreeing to leave your nest egg alone.
A good lawyer can help you navigate those negotiations during settlement discussions.
3. Make Life Easy on Yourself With an Even Split
Most states will agree that you offering to split your 401k money evenly with your spouse will satisfy shared property laws. Consequently, if you want to make legal proceedings as simple as possible, consider biting the bullet and splitting your 401K alongside your other assets.
When you consider how much fighting may cost you in legal fees, it may be that coming to a quick deal is the most financially and emotionally rewarding path you can take.
4. Talk to an Attorney
You can read online content on 401k divorce distribution until you’re blue in the face. No matter how much insight you find online though, nothing replaces the counsel of an experienced divorce attorney.
So, when you’re ready to put into motion a plan relating to your divorce and retirement money, seek a lawyer to consult to make sure your course of action is sound and legal in your state.
Valuing Expediency May Be the Best 401k Divorce Advice We Can Give You
As we noted, spending inordinate amounts of time fighting with your ex-partner over money can be costly both financially and emotionally. Because of that, perhaps the best 401k divorce advice we can give is to put a premium on expediency.
Cutting a deal quickly may cost you more upfront. However, when you consider the stress you’ll save and your ability to move on with your life, you may find that the price is well worth it.
For more money advice, check out additional content on our thrift-focused blog.