People often worry about the financial consequences of divorce. They have heard stories of those who have lost a significant portion of their personal resources during divorce. Especially if someone is close to retirement age, it is natural to focus on the potential impact that divorce could have on their future financial stability. Retired adults are entirely reliant on their personal savings and assets, so people spend decades setting aside funds for their golden years.
Not only do people need to pay for divorce proceedings, but they also need to divide their personal holdings with their spouses. The funds they have set aside for retirement may be among the most valuable assets in the divorce, leading to conflicts about how to handle those retirement savings.
Does someone have to worry about losing a significant portion of their retirement savings during a New Jersey divorce?
Some contributions may be subject to division
Many factors influence how much of someone’s retirement savings might be at risk during a divorce. For example, prenuptial agreements can sometimes protect someone’s retirement savings or other separate assets. Oftentimes, retirement accounts are in the name of just one spouse and possibly in an account linked to their employment.
Although people sometimes assume that retirement savings are separate property, they are often marital property. People may need to disclose how much they added to their retirement savings throughout the marriage during a New Jersey divorce. They must either negotiate a way to share those funds with their spouse or wait for a judge to equitably divide all of their marital property, including the marital portion of their retirement savings.
If the actual division of a retirement account is necessary, people can split the funds into two separate accounts without worrying about penalties and taxes. Provided that a lawyer drafts a qualified domestic relations order (QDRO), both spouses sign the document and they submit it to the proper party, they can divide retirement savings between them without any additional losses.
Understanding what happens to someone’s most valuable resources, like their retirement savings, may benefit those preparing for the property division process in a New Jersey divorce. Seeking legal guidance is a good way to benefit from personalized feedback and support in this regard.
