Many view a home as the most important asset to consider when a divorce looms. However, Texas residents who are considering divorce and facing decisions about property division may want to rethink this issue. Many individuals focus so intently on the house that they completely ignore retirement accounts belonging to their spouses.
Marital property typically includes assets acquired during the course of a marriage, with the exception of gifts and inheritances. Equitable distribution may be used in property division related to divorce. Retirement accounts should be considered, although funds that were in such an account prior to the marriage are not subject to asset division. Any increase in value of such accounts, however, may be considered marital property.
An individual facing divorce may want to prepare in advance by taking steps to protect their financial interests. Working with a financial planner may allow for a careful look at issues such as retirement funds as well as potential Social Security benefits, especially important for those dealing with divorce in their later years. Careful consideration of a home’s value and maintenance costs may also be important. In some cases, sale of the home and division of the proceeds may make the most financial sense. An individual may be better served by seeking a spouse’s Roth IRA instead of a traditional IRA due to the fact that Roth funds have already been taxed. Retirement assets may prove more valuable than alimony, making it important to consider long-term prospects.
Legal assistance may be important for evaluating all options before making any firm decisions about property division. A lawyer can ensure that all retirement accounts are considered as a settlement is negotiated. Additionally, a lawyer may recommend the involvement of a forensic accountant to ensure that assets aren’t hidden during the settlement process.
Source: Forbes, “The Big Money Mistake Divorcing Women Make“, Kerry Hannon , July 03, 2014