Sage advice for anyone going through a California divorce is to ensure that you seek your fair share of any retirement funds acquired during the marriage – especially given the fact that retirement funds can represent one of the largest marital assets to be divided during a divorce.
For instance, as divorces among the Baby Boomers continue to rise, their retirement accounts are often worth a significant amount given the decades of savings and growth; sometimes even being more valuable than the shared home.
Since California is a community property state – basically meaning all assets amassed during a marriage belong to both spouses – a divorcing spouse is entitled to his or her share of all retirement savings, even if it was the other spouse’s salary that primarily contributed to the retirement accounts during the marriage. Contact an experienced San Diego divorce lawyer if you are considering filing for divorce or if you have already been served with divorce papers.
Qualified Domestic Relations Order in California
When splitting retirement plans covered by the Employee Retirement Income Security Act of 1974 (ERISA) – such as 401(k)s and pensions – a Qualified Domestic Relations Order (QDRO) must be entered by the court.
Specifically, a QDRO is a court order that delineates instructions to the administrator of the retirement plan as to how the retirement funds should be divided between the ex-spouses. It is of vital importance that the QDRO is drafted properly and accurately – making sure it addresses all community retirement plans – as an error may preclude a divorcee from obtaining the retirement funds he or she would have otherwise be entitled to had it been drafted correctly in the first place.
Retirement is expensive, be prepared
Following a divorce, a person may only have one income stream to cover an entire household’s budget – meaning less money is left over to put towards retirement.
This simple observation may help explain the results of a survey recently conducted by ING. Specifically, this survey discovered that among the divorcees examined, they had, on average, $10,000 less in savings for retirement than their married counterparts – even though the divorcees were generally five years older.
Add these results to the simple fact that it generally costs more for two single people to individually retire as opposed to a married couple, and a dire situation becomes clear: anyone contemplating divorce shouldn’t wait until after the divorce to start thinking about retirement assets as this may prove too late.
The intricacies associated with complex property division during a California divorce further bolsters the need to consult with an experienced family lawyer in San Diego, CA if considering divorce. By making sure you get your fair share of retirement funds, it can help give you the peace of mind in knowing you are better prepared for your twilight years.