Most California couples who have made the often difficult decision that it is best for all concerned to end their marriage understand there is a lot to work through. Establishing two households, especially when children are involved, is a high priority. Dividing assets and liabilities can prove to be complicated, and matters between the divorcing couple can become contentious. Among the most complex of issues is how to handle retirement accounts, and this is true even if the couple is relatively young and has many more work years ahead.
Legal experts explain that when retirement accounts exist, part of the final order from the court concerning the divorce will include a Qualified Domestic Relations Order. This order will provide detailed instruction on how and in what manner various accounts, such as retirement plans, IRAs, 401(k)s and social security, will be handled. This can be made more complicated if either or both individuals had been married previously.
Another factor to consider is that California is a community property state. This means that everything earned during the term of a marriage is considered community property, absent some agreement to the contrary. That means, for example, an IRA account established by one spouse through his or her work with only that person’s name on the account must be divided between the two or offset in some manner with another asset. Additionally, it may not be as simple as cashing in the account because tax and penalties are likely to apply.
A family law attorney can offer counsel and advice on these issues and others impacting a divorcing couple. Keeping the emotions to a minimum while respecting the rights and responsibilities of all involved is the goal.