In a divorce, all assets are divided, including your retirement assets, unless otherwise stated in a prenuptial agreement. Retirement might not be anywhere near the horizon for you, but you should still take every precaution to protect your future or you might end up paying for it for years to come. Thankfully, there are ways to go about splitting these assets in a way that allows both parties to avoid the steep penalties that can come with poor planning or misunderstandings of the law.
Deciding What Happens to Your Retirement Plans
To divide retirement assets between spouses, the Internal Revenue Service (IRS) will need a Qualified Domestic Relations Order (QDRO), which will determine how the retirement assets are to be divided. The QDRO will also be presented to your retirement provider. This can be somewhat of a complex process, so hiring an experienced divorce attorney will help you avoid any costly mistakes you might make on your own.
If you think drafting a new will can solve the issue of who would stand to inherit your retirement assets upon your death, you would be wrong. You still need to change your beneficiary designations on your retirement plans. Failing to do so means your spouse would likely inherit your retirement assets, regardless of what your last will and testament states. Even if you happen to have a thoughtful ex-spouse who respects your wishes and leaves the money to your children, he or she would be liable for the tax payment. To spare both of you any hardship, get a lawyer to make the necessary changes.
Review Your Social Security Benefits
If you were married to your spouse for longer than 10 years prior to the divorce, you can receive a portion of your ex-spouse’s Social Security benefits as part of your divorce settlement. However, if you decide to remarry and do so before the age of 60, you will void your chance at collecting your ex-spouse’s Social Security benefits.
Examine Your Investment Portfolio
You should also take the time to look over your investment accounts and examine your risk tolerance. Now that you are single, you should take your current income, savings, and profession into consideration when it comes to your investments. You no longer have the benefit of a combined income and will have to make any appropriate changes.
Experienced Divorce Attorneys in Long Island
Divorce is not an easy decision to make and, without the right representation, it can be an even harder process to endure. At Hedayati Law Group, P.C., we are committed to understanding the needs of our clients and ensuring their best interests are protected. We will guide you throughout the divorce process and explain the pros and cons of every important decision. No divorce matter is too complex for our Long Island legal team to handle.
To obtain the representation you deserve during this difficult time, contact our office today at (631) 880-6440 to schedule a free consultation with a knowledgeable member of our legal team.