One of the worst parts of a divorce is dividing the property, especially if you have valuable assets like collectibles, jewelry and multiple properties. You may find it particularly troubling if you have a valuable assets like an investment account, though. You’ll want to understand what will happen with these as your divorce progresses.
Do my ex and I split an investment account in half when we divorce?
You can make one of two choices if you have an investment account and are preparing to divorce, including:
- One of you can keep the investment portfolio and hand over other assets to your spouse.
- You can each stake claim to the assets contained in the investment account.
You must draft a Qualified Domestic Relations Order (QDRO) if you each decide to retain a portion of the investment account.
What is a Qualified Domestic Relations Order?
A QDRO is a legal document in which you and your ex spell out your plans for dividing an investment account like a 401(k). A judge will typically refer a spouse back to the order and remind them that they agreed to abide by it should any payment disputes arise.
QDROs carry with them many tax-saving benefits. There are often tax penalties associated with a 401(k)’s owner making withdrawals before they reach a certain age. A QDRO can minimize their tax-burden and thus the decline in value of their investment account.
Some individuals who have individual retirement accounts (IRAs) don’t generally require QDROs to avoid tax penalties assessed to the transfer or distribution of funds, as is often the case with 401(k)s.
How to best stake a claim to your spouse’s investment portfolio
Financial matters are some of the most challenging facets facing divorcing Florida couples to sort. A family law attorney can help you make sense of the pros and cons of certain choices in your Melbourne divorce case.
