It is for this reason that knowing how to protect your assets during a divorce is of utmost importance. But how can you successfully do this? It is worth mentioning that safeguarding your assets through this rigorous process is not a walk in the park.
And while you might want to get through the divorce process and be over within the shortest time possible, remember that swiftly going through the process can prove to be even more costly. It is of paramount importance to take your time to consult with both financial advisors as well as family and a divorce attorney.
Retirement Benefits
Contrary to common belief, the division of assets during divorce proceedings go further to include retirement benefits. And while you might not want to lose what you've worked for all your life, you should ensure to get a clear explanation from your attorney as to how you can protect your retirement benefits from your divorce proceedings.
In some cases, engaging a QDRO specialist is necessary if you are concerned about if and how retirement benefits will be distributed in a divorce. Finding a QDRO lawyer, such as Carla McKain, may be a worthwhile investment.
Making moves without due considerations could mean that you don't get a fair share of the settlement or, worse still, part with a larger portion of your retirement benefits than you would intend.
Remember that laws in different states are quite flexible. Some may apply the domino effect, where all-round considerations aren't made. With such a ruling, you stand will your retirement prospects be dented immensely, but you will have to pay income tax penalties on your retirement benefits, even before you receive it.
Strategies To Help Protect Your Assets During Divorce
1. Use Personal Banking Accounts
One of the best ways to secure your financial assets during a divorce is by using personal savings and checking accounts. If you have been sharing banking accounts with your partner, then it is high time to open your own personal banking account.
In a bid to avoid any misunderstanding, it is crucial to ensure that you inform your partner once you open the account. At the same time, ensure to notify your spouse as to how much money you will be depositing into the account from your joint account.
This money will go a long way to cover all the fees that you will have to pay during the divorce process. This includes attorney fees, living fees as well as legal fees. It's recommended to start the process once you are sure that you have enough money to last the entire process.
2. Avoid Incurring Any New Debts
Once you have opened your personal banking accounts, the next step is to avoid any new debts. The idea is to save money for the divorce process and not incur more debts to your name.
Remember that getting charged through your credit card doesn't add to saving money. Ensure that you first clear your name from all running debts, including credit card, before working on saving your money.
Always keep in mind that the divorce process is highly expensive. Once the process kicks off, ensure to use only cash, and avoid incurring more debt on your credit card. This way, you will have a clear plan for your future life.
3. Ascertain The Values Of Your Pension And Retirement Accounts
One of the biggest marital assets that any married couples have is the pension and retirement account. It holds both partners accumulated retirement benefits.
But how will the accounts be divided? The court will mostly rule on how funds in these accounts can be shared, depending on the state's marital divorce laws—getting a clear understanding of how these laws work will put you in a better position as to how the settlements will be made. This way, you won't be taken advantage of during the final settlement negotiations.
4. Avoid Asking For Alimony
Today, a vast majority of partners in a marriage relationship aim at settling for alimony in a divorce. What they don't understand is that alimony payment is considered a taxable income.
Ensure to avoid any payments that are labeled as alimony from your spouse. Once payment is not listed as alimony in the settlement decree, you won't be obligated to pay any income tax for it after your marriage has ended.
