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Gettysburg Pennsylvania Family Law Blog

Properly dividing retirement assets for a divorce

One of the many assets that Pennsylvania couples may have to divide during a divorce is their retirement money. These funds can represent the largest amount of cash the couple has.

If individuals do not take the appropriate steps when dividing retirement accounts, they could face high penalties and taxes as well as the realization that they may have given the other party more of their retirement money than necessary. To avoid such results, it is important that people remember that the different types of retirement account have their own rules that dictate how the accounts should be divided.

What is a QDRO and do you need one?

At one time, you and your spouse may have talked about what your life would look like after each of you retire. Perhaps you wanted to travel more together, spend more time with the grandkids or find a quiet spot to live out your golden years together. To that end, you began faithfully contributing to a retirement plan through your employment.

Now, those dreams of retirement together have come to an end. You face divorce, and more than likely, other than your marital home, your retirement plan is your biggest asset. Even though you earned the money in the account, you discover that your retirement account is part of the marital estate, and your spouse is entitled to a share of it. You may not be happy about having to share that account in the divorce, but you are even less happy about the prospect of paying an early withdrawal penalty.

How and why to make a divorce plan while married

Some Pennsylvania couples who are getting married might want to consider a prenuptial agreement. Divorce may be far from their mind, but they can think of it as a safety precaution. Married couples can create a postnuptial agreement. Both documents lay out plans for how property will be divided in a divorce, and the first one can also identify assets and debts the couple bring into the marriage that they want to keep separate.

Before getting married, people might want to have some assets appraised. For example, a business can be difficult to get a value for, so having this baseline could be helpful later. Another step people can take to protect themselves financially in case of divorce is setting up separate bank accounts. Even if the couple primarily uses a joint account, a separate bank account can be used to manage separate assets.

Organization of financial records essential for divorce process

Divorce requires a division of marital assets in Pennsylvania, and both spouses must disclose their financial records as part of the process. Because divorces among older people have become increasingly common, many people pursuing divorce could have multiple assets and retirement savings accounts to consider. To begin, people should make a list of all accounts and assets, including inherited funds. Inherited funds could be exempt from property division, but the issue could be complicated if the money went into a joint account with the spouse.

To avoid forgetting about old accounts, people need to review their records from previous jobs. They might discover forgotten profit sharing plans or stock options. The terms for splitting every 401(k) or pension plan needs to be stated in a divorce settlement. Uncovering every detail is important because assets missed during the creation of a divorce settlement could trigger legal disputes in the future.

Careful planning makes post-divorce transitions easier

Pennsylvania couples should know that getting the final decree signed by their presiding divorces judge is almost, but not quite, the end of the process. Typically, the court order describes the manner in which marital assets are to be divided, but it is up to the parties to finalize the process. This means couples ready to separate must work together on one last project to get across the divorce finish line.

The final decree is really a set of instructions from the judge. The divorcing couple is charged with carrying out those instructions in a timely fashion. For example, if the order calls for a piece of real estate to be sold, it must be someone's responsibility to see that the property gets placed on the market. If a retirement account is to be liquidated, someone must provide the necessary paperwork to plan administrators. Having a specific plan in place designating responsibilities can help prevent confusion and delay.

Revenge hurts kids and parents in divorce court

Pennsylvania parents dealing with the emotional fallout of a failed marriage may be tempted to use the justice system as a tool to gain revenge seek revenge against their spouse. Hurt feelings can make the idea of hurting someone with a public outing of misdeeds seem attractive in the moment, but attempting to do so is generally an expensive mistake that costs much more than money.

There are a number of reasons why revenge should not be a focus during divorce litigation. A primary reason for couples with children is that exacting revenge harms the children as well as the former spouse. The marriage is ending, but the children will typically have a relationship with both parents, and emotional, economic or reputational harm inflicted upon either parent also affects the kids. Many divorcing couples think that a judge will be shocked to hear about infidelities and other wrongs committed during a marriage, but this is usually not the case. Judges hear thousands of cases in their career, and there are very few things that can shock them. Mostly, judges just want to ascertain the existence of legal grounds for divorce and then find a fair solution for splitting families.

Divorces among younger couples may be less complex

The rise in the median age of a first marriage means that fewer people are getting divorced at a younger age. Those who do divorce in their 20s may have fewer complications than couples who do so after a longer period of time together, but they might also face some unique challenges. Many young divorced Pennsylvania couples may feel isolated from their peers who have not been through a similar experience. In fact, many of their friends might not have even married yet.

The advantage is that there may be fewer financial and logistical ties to break. It is likely that there will be a large discrepancy in income in this age group. They are also less likely to have had children or to have many shared assets. Millennials are also more likely to get prenuptial agreements than people in other age groups.

Divorce is no time to play hide and seek, especially with assets

If you're preparing for divorce, you can logically assume there are others in Pennsylvania going through similar situations at this time. Hopefully, you and your soon-to-be former spouse get along well enough that you are both willing to compromise and cooperate in order to achieve a swift, fair and agreeable settlement. If you have kids, it might take time to negotiate a new parenting plan, but if all goes well, you should be out of court and on your way to a new lifestyle before long.

What if that's not the case? What if you suspect there's a major problem and you aren't sure how to resolve it? You can overcome many divorce-related obstacles by knowing your rights and arming yourself with information ahead of time so you know how to proceed if a particular problem arises. You can also tap into outside resources for support. If you suspect your spouse is up to no good concerning marital property, you may be one of many who encounter hidden asset trouble in divorce.

Contempt is often a sign that a marriage is in trouble

Pennsylvania residents might think that money troubles or infidelity are the most common causes of divorce, but an expert on marital strife who has observed thousands of couples says that contempt is the clearest harbinger of a marriage in trouble. He believes that criticism, defensiveness and stonewalling often accompany contempt when spouses begin to find each other's company unbearable, but he also says that there are steps couples can take to combat this destructive emotion and get their relationships back on track.

Contempt between married couples is particularly destructive because it reveals that one party has lost respect for the other. These spouses feel that they are better than their husbands or wives, and these feelings are commonly conveyed by malicious language such as sarcasm, mocking and name-calling and dismissive body language like eye-rolling and sneering. When contempt creeps into a relationship, people become so ensnared in hostility that they forget or overlook the positive qualities that initially attracted them to their partners.

Start-up assets can bring challenges during divorce

For people in Pennsylvania dealing with the end of a marriage, divorce can always be a difficult time on both an emotional and a practical level. The disentangling of one's personal lives can be extremely difficult, but this can be intensified tremendously by the disentangling of financial lives. For people with high-powered careers and substantial assets, property division can be particularly challenging.

A number of high-asset divorces involve people with careers in the tech industry, including those who have founded start-ups or who have invented or developed new technologies. Some areas of the country, like Silicon Valley, have become centers of tech wealth, and these areas of the country are also developing trends in dealing with high-asset divorces.

Law Office of
Katrina Luedtke LLC

Law Office of Katrina Luedtke LLC
43 West Middle Street
Gettysburg, PA 17325

Phone: 717-253-9951
Fax: 717-420-2151
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