Aharonov & Revy Family Law, LLP Aharonov & Revy Family Law, LLP

California couples, retirement and pension plans, and divorce

For many California couples, divorce seems to be the norm rather than the exception. With statistics concerning the number of marriages ending in divorce hovering at around 50 percent, the number of individuals considering divorce and expressing concerns about their retirement accounts is significant. In addition to the other assets that will need to be considered in a divorce, decisions regarding pension plans and retirement accounts can be rather cumbersome.

For some couples, the best alternative appears to be splitting the assets and establishing their own individual accounts. This method will allow each individual to make his or her own decisions concerning retirement and accessing these accounts. Otherwise, it is possible that one ex-spouse will be at the mercy of the other ex-spouse in deciding when it is possible to receive retirement benefits.

Other items to be considered in the divorce proceedings are possible stock options and deferred compensation. If either of these options are possibilities, each party will want to analyze the value of each. Additionally, each party will want to review the tax implications associated with each option.

While it is common for each divorced individual to create a new will, it is very easy for one or both of them to forget to change the beneficiary on each retirement or pension plan. Regardless of what a new will may indicate, the stated beneficiary is the one who will profit from the account. In other words, it is possible that an ex-spouse will receive beneficiary benefits simply because one forgot to change the beneficiary designation.

Whenever a California couple decides that divorce is the best option, the spouses will want to review their financial positions. Specific items for consideration should include any retirement and pension plans to which one or both spouses are entitled. It is likely that each individual will want to have his or her accountant and attorney review his or her financial position prior to any final decisions being reached.

Source: U.S. News & World Report, "12 Steps to Protect Your Money in Divorce", Christine Giordano, Aug. 15, 2016

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