Couples that are preparing for divorce may agree about the fact that their marriage is effectively over, but that is often the only agreement they can reach. Divorcing spouses often fight bitterly over everything from support and timesharing plans to the division of their property.
The resources that result from someone’s personal employment and that represent their future financial stability often trigger the most emotional responses during property division proceedings, save for those that are most focused on child custody concerns. 401(k)s and similar retirement saving accounts are often a top priority in Florida divorces.
Retirement accounts are often classified as marital property
While it may not be the answer people want, the truth is that often a significant portion of what people have set aside for their retirements will be subject to division in the divorce. Contributions made to a 401(k) or similar retirement accounts using marital property are in play during property division negotiations or litigation.
Although someone may have started the account before they got married and their spouse may never have made contributions, at least the balance contributed during the marriage will typically be at risk of division. That being said, there is no rule that declares that Florida spouses must literally divide every asset they have. The approach instead requires an equitable or fair outcome.
Someone could potentially retain their entire 401(k) account provided that they allow their spouse to keep assets that are worth similar value. If they do have to divide retirement accounts, divorcing couples can often protect themselves from early withdrawal penalties and taxes by using special paperwork to divide the accounts.
Most divorcing couples have time to rebuild
People tend to feel a bit frantic about their finances as they prepare for divorce, but the truth is that people do bounce back from divorce within a few years if they are careful about their finances. Some people might rework their budget to put more in savings for several years to recover what they lose in the divorce. Others could change their investing strategy or decide to delay their retirement so that they have longer to save.
Setting achievable goals for property division and pinpointing the resources that will matter the most in the future can help those who are preparing for a Florida divorce better protect their interests. Seeking legal guidance can often be helpful as well.