Through the trial and tribulations of a separation, many matters come into play when figuring out how to split assets. Some aspects however might fall through the cracks because of the complicated steps that are required to divide them. Sometimes it is because of future plans that are not thought of during the separation.
These matters such as retirement plans, stock options, restricted stock, and deferred compensation could be considered among those complicated matters. If any of the above were acquired during the term of marriage they could be considered marital property and therefore could be and should be divided or considered when reaching settlement. Before trying to figure out if these matters fall under marital property there are important things to ask.
What kind of split would makes sense? Although 50/50 might initially seem like the right way to go, you might want to consider which party had a stronger employment history throughout the marriage. The spouse with the strongest work history would essentially be able to rebuild his/her savings much faster. Therefore in some situations 50/50 does not make the most sense.
Another question to ask would be: What are the tax implications of those various scenarios? Before agreeing to a division of assets, you need to look over what will be the implications and how they will affect both current and future tax terms.
Also, Do you need a QDRO? A QDRO is a qualified domestic relations order which is a judicial order in the United States, entered as part of a property of division in a divorce or legal separation. This splits the retirement plan or pension and how the benefits should be paid out. This a complex document that should be drawn up by someone who is experienced. Timing is critical.
Other steps that one might consider taking during a separation to prepare for “sudden catastrophes” are to consider taking out a life insurance on your spouse. Should something happen to your spouse that would result in death, the QDRO is in jeopardy if it has not been imposed. Also consider what would happen if you were to die. You would need to prepare for the circumstances so that children involved would protected. Could your spouse be trusted? Who will you appoint? What will you leave for them?
Careful planning is key here. For legal advice on divorce and how it can affect your financial future, call us today at 512.215.5225 to schedule a consultation with a divorce lawyer.