On behalf of Morna Challoner of Challoner Law posted in High Asset Divorce on Thursday, November 9, 2017.
California marriages can last for years and be right for people until they are not anymore. In those years of a marriage, a couple will go through and experience a lot together. Financially, marriages often see the accumulation of assets, like bank accounts, money market accounts and retirement accounts, like a 401k. In a divorce, many couples’ first questions revolve around these financial details, like what to expect in a high asset divorce?
First, state law determines how marital property is viewed. Tennessee is an equitable property state, meaning if necessary, a judge will determine a fair and equitable distribution of marital assets. Spouses can always determine this themselves, through negotiation, but if it gets to a judge, that judge will make the final decision. In theory, a retirement account would be split 50/50 and equitable division of an asset that is usually accumulated during the time of a marriage.
Many people wonder how an asset like this can be split when its intent is to live out its existence in an untouched account until reaching retirement age. There are ways to file for one time asset withdrawal from a 401k account without being taxed on it. It must be filed in accordance with the law in order to avoid being slammed with a big tax bill. If a tax bill is unavoidable in certain situations, it should be figured into the proceeding as an expense that both spouses would share, rather than one person footing that bill.
Retirement accounts are an important asset that many married couples have worked hard to accumulate. It is only fair that both spouses would have access to that asset. Every couple is different, and some may decide that they would rather give up that portion of marital property in lieu of another piece of marital property, like the family home.
Source: FamilyLaw.FindLaw.com, “Divorce, Taxes and Your Estate Plan,” accessed on Nov 6, 2017