Making Informed Property Division Decisions

Live at Five’s Board Certified family law attorney, Sonya Coffman, answers questions submitted by Southeast Texas KFDM News viewers. If you’re planning to get a divorce and your spouse has an employer-sponsored retirement plan, such as a 401k or pension plan, are you legally entitled to part of the money and how do you protect your share?



Transcription

well even while you're going through the difficulty of a divorce you need to make informed financial decisions regarding the division of the property that you and your spouse have accumulated during your marriage retirement savings are one of the largest assets many people own and therefore are important issue in divorce proceedings if you're planning to get a separation or divorce and your spouse has an employer-sponsored retirement plan such as a 401k or pension plan you are legally entitled to part of the balance but how do you protect your share for answers we turn to live a five's family attorney sonya coffman and we appreciate you joining us and this is kind of complicated because most people think men typically know more about the finances than the women do so a lot of women are left out in the cold and really don't know what questions to ask when they go to an attorney for divorce thats true and a good attorney should advise the client what to look for in where to get that information but it's important to identify all the different retirement accounts that exist because sometimes those accounts are with at bank or a brokerage firm as well as accounts with an employer so the first step is to identify all the accounts that are out their now how do you find out if you have a spouse that's not too willing to communicate that information to you well I always advise clients to just look around house first of all for statements because oftentimes statements come in the mail or in a file somewhere so take a look and see what you can find and then beyond that there are a couple of different discovery procedures during the divorce that the spouse is obligated to tell you what else is out there one is an inventory and one is through written discovery that the attorney sends out to the spouse's attorney so probably enlisting the help of an attorney is your best bet it would be definitely to protect your assets in the event of a divorce so let's talk a little bit about the differences in 401K and some of the other retirement accounts that are out there that you are actually entitled to yes a 401K is what's called a defined contribution plan and that means that the employee and sometimes the employer will contribute money or stock to an account for the employee's benefit and that is divisible at the time of divorce by figuring up what is the community property interest in that account and then the attorney will prepare what's called a qualified domestic relations order or QDRO for short and that is sent to the plan administrator telling them to transfer a certain amount of that account over to the spouse now what are tax ramifications in pulling out money early from a 401K and there are no tax ramifications just for the transfer of the QDRO and so if the spouse wants to put that in a tax-deferred account for the long term that's a great idea but if the spouse thinks they're going to need to money in the short run there are tax consequences to pulling it out before age fifty nine and a half and that would be a ten percent penalty plus the payment of income tax on what comes out so it's not a good idea to get it out early if you can avoid it and other things that that they could do is possibly ask for different assets as opposed to part of the 401K that would balance out yes if the spouse thinks they're going to need the money before retirement it's a good idea then to ask for something else rather than the 401k alright sonya has always we appreciate you stopping by and answering our questions and if you have a question about family law let our attorney answer your questions you can fax those questions at a ninety seven three oh five or better yet email them at laf@kfdm.com and next month we're going to talk about social networking sites and the impact it has on divorces