On behalf of Kelly Law Office, LLC posted in high-asset divorce on Tuesday, October 29, 2019.
Ohio residents who are considering a divorce may want to take a look at their investments and how they might be affected. For people who do not handle the family finances, it is important to know what all the assets are and how to access them.
Dividing up investments may not be a simple process. Selling them and splitting the proceeds may not make things any easier. For example, selling securities could incur a capital gains tax. It may not be possible to withdraw from or split other investments, such as annuities, without paying significant penalties.
There are penalties associated with dividing retirement accounts as well, but depending on the type of account, there are generally ways around them. For example, the couple may need a copy of their divorce decree to split an IRA. They will then need to roll the IRA into separate, new IRAs. For 401(k)s and 403(b)s, a document known as a qualified domestic relations order is necessary, and it must be approved by the plan administrator. A final step after the divorce may be removing the spouse from beneficiary designations on retirement accounts and any other assets that are passed in this way.
Couples have the choice to negotiate an agreement outside of court or to go to litigation. Many prefer to at least try negotiation at first since this can be less stressful and less costly. It also gives them more control over the final divorce settlement. They might be able to reach an agreement that suits them better than one a court might make. For example, instead of dividing a 401(k), a better solution might be for the person to keep another asset of similar value, such as a home or a savings account.