Divorce has a profound impact on both your emotions and finances. While you are likely prepared to divide physical property such as the house and car, have you thought about your retirement assets? If you have not yet prepared, it is time to get smart about your retirement plans.
If you take some proactive steps, you can get through your divorce with as much of your retirement intact as possible. Here are the top three ways to protect your retirement assets.
1. Close joint accounts
Be sure to close any accounts you share with your spouse. You do not want to be responsible for any debt your spouse accumulates. Once you close your accounts, open up personal bank accounts and your own credit card. Saving money and establishing your credit will help you handle the financial impacts of divorce.
2. Do not cash out your retirement fund
You might be stressing out about all the costs of divorce. It might be tempting to use your retirement fund to pay for it, but you will owe early withdrawal penalties, income taxes and opportunity cost. Consider other options first, such as getting a loan.
3. Collect every financial and retirement document
It is a good idea to have everything ready before you consult an attorney. Gather all important records starting with tax returns. Your tax returns should have details on bank accounts, investment dividends and IRAs. If your spouse had any employer retirement accounts, you may need to look for personal statements.
Dividing your retirement accounts can be a scary thought aside from dividing your other property. How can you make sure you will make it through the other side? If you follow these three steps and consult an attorney, you will be on your way to protecting your retirement funds. Do not let the stress of divorce distract you from taking action.
For more information, contact Louis Wm. Martini, attorney at law.