On behalf of Cooper & Tanis, P.C. posted in high asset divorce on Monday, April 3, 2017.
A Colorado resident who is getting a divorce and who has a retirement account or whose spouse does may need to divide that account. This will require a document known as a qualified domestic relations order. Because this document may be both complex and costly, people might want to work with a certified divorce financial analyst to help ensure they understand how they will be affected by fees and taxes.
If a judge decides on property division, the retirement account might not be divided 50/50. There will be an equitable division, but a judge might interpret that differently depending on circumstances. If the account is divided, each person might be advised by a financial analyst to set aside a certain amount to cover fees.
If one person takes an asset that is worth less than the retirement account while the other person takes the retirement account, this does not necessarily mean that the person whose asset has a lower worth got a bad deal. The person who got the retirement account might not have immediate access to the money for years without paying fees and taxes. For example, with a 401(k), the person must be 59 1/2 or older in order to withdraw the money without a penalty.
During the process of property division, whether they are negotiating with the help of their attorneys or have turned to litigation, people should understand the financial implications. In a high-asset divorce, there might be a prenuptial agreement in place. However, if there is not, the division of investments, real estate and other assets may be complicated. If a business is involved, the process may become particularly complex because either party might have a claim on the business regardless of their level of involvement.