The stress levels experienced during a marital separation can seem relentless at times.
There are so many different things to remember during your divorce process. One of the most important financial concerns is, how will my divorce change the future of my retirement?
Did you know that your social security retirement and disability benefits may change depending on how long you were married and how old you or your ex-spouse are? Your spouse could receive a part of your retirement and disability benefits as part of their spousal support. On the other hand you may have additional benefits from being married for more than 10 years, benefits which help the lower earner without penalizing the higher earner.
The division of retirement accounts is confusing and technical. Do not move retirement money until you consult with a knowledgeable divorce professional. Doing things in the right order and at the right time, will save you money and avoid taxes and penalties.
Here are some other details to keep in mind concerning pension plans and divorce:
- Retirement funds are usually considered a shared asset
- Each state has its own formula on how retirement funds are divided
- Rules also vary based on the specifics of the retirement plan
- If your ex remarries – the new spouse may not receive your benefits
- Additional court orders are required to divide retirement funds
- Taxes and penalties can be avoided when done correctly
Many of these questions are best answered by a financial advisor who specializes in how funds will be dispersed during a divorce.
The Collaborative Divorce process is an alternative dispute resolution method that can assist you and help maintain your family unit while staying away from court litigation. Our financial professionals are part of your collaborative divorce team, are here to explain the couples’ financial situation, and are neutral.
The Collaborative Practice San Diego is a nonprofit, multi-disciplinary referral network of independent professionals of attorneys, mental health professionals and financial advisors working together to learn, practice, and promote Collaborative processes for problem solving and the peaceful resolution of family law issues, with an eye toward preserving the emotional, as well as the financial assets of the family, including retirement funds.
Contact us today to see how we can help you protect your pension plan!
Note: This information is general in nature and should not be construed as legal/financial/tax/or medical advice. You should work with your attorney, financial, medical or tax professional to determine what will work best for your situation.