First and foremost, if you do not want your spouse to be your beneficiary, make sure your beneficiary designations are updated on your investment accounts. Also make sure that \u2013 if you have not been the person in charge of these accounts and other family finances \u2013 you obtain all of the information you need to access these accounts, including how to place on withdrawals, if necessary.<\/p>\n
Know The Consequences<\/strong><\/p>\n In addition, before you make any major decisions concerning your assets, make sure that you fully understand any and all consequences associated with those actions, including potential penalties and taxes. Some assets, such as annuities, come with significant penalties if you exit early, so to speak. In addition, timing and the marketplace also affect what you decide to do with certain investments. Also keep in mind that early withdrawal from certain retirement accounts can also carry penalties.<\/p>\n Each Asset Is Handled Uniquely<\/strong><\/p>\n Your attorney will advise you that the process involved with splitting up an asset depends upon the asset: For example, some accounts, such as brokerage accounts, require that a letter be sent to the financial institution dictating what you want done with the account. And when it comes to joint accounts, if you have any concerns about actions that your spouse might take, you and your attorney can get in touch with the financial institution to ask that the account be frozen until an agreement is reached regarding your assets.<\/p>\n Splitting Up Retirement Accounts Can Be Complicated<\/strong><\/p>\n Divorce settlements frequently contain specific terms as to what will happen to retirement accounts Splitting these accounts up can get complicated precisely because it depends upon the asset. For example, splitting up a 401(k) typically requires that your attorney submit a Qualified Domestic Relations Order (QDRO) to the plan administrator. Some will allow the spouse who is not the employee to open their own account, while others require a rollover into an IRA. The QDRO also allows these funds to be withdrawn without penalty. However, know that, in splitting up an IRA, no QDRO is used, and instead, they are divided based upon what the divorce settlement dictates. That agreement is submitted to the account custodian, who can then roll the funds into a new IRA in order to avoid incurring taxes. Distributions from a qualified plan pursuant to the QDRO are exempt from the 10 percent early distribution penalty, however, these do not apply to IRAs: any funds taken before age 59 \u00bd are typically subject to an early withdrawal penalty.<\/p>\n Your attorney will also help you weigh the \u2018pros and cons\u2019 of particular assets; for example, withdrawals from some accounts will be different from others (for example, a Roth account) due to various tax implications.<\/p>\n Work with The Right Professional<\/strong><\/p>\n Ultimately, when it comes to dividing financial assets during divorce, obtaining guidance from your attorney is the best way to stay on top of investment-related issues. Contact our Orlando divorce attorneys<\/a> today at Arwani Law Firm, PLLC to find out more.<\/p>\n Resource:<\/p>\n fool.com\/investing\/2019\/10\/24\/6-tips-for-managing-your-investments-through-divor.aspx<\/p>\n
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