Handling Retirement Funds in a Divorce

Divorce comes with many decisions, some more complex than others. Some of the most difficult decisions revolve around distribution of assets. In Florida, property and other assets acquired during the marriage are considered marital assets, belonging to both parties. This generally includes any retirement assets accumulated in retirement or pension accounts. Many couples fail to immediately address these funds in a divorce, but that can be a mistake. It is important to protect your retirement accounts when you and your spouse end your marriage.

Identify Retirement Accounts

Although you normally may not be paying much attention to your retirement accounts, when a divorce is imminent it is best to review these issues as soon as possible. If you have had several long-term jobs, you could have several or more pensions or retirement accounts. For this reason, it is helpful to keep good records of the companies and funds that you have accumulated. The dates of the retirement funds are critical since they will determine whether the money was accumulated during the marriage. There are issues with regards to these accounts that must be addressed, including taxation, and beneficiaries.

Complex Concerns

Retirement fund concerns can be quite complex, especially when several accounts, or multiple marriages are involved. If you need to transfer funds from an IRA or other savings account, it is necessary to do it properly. Incorrect transfer of funds could cause the transaction to be considered a full distribution, which may result in tax penalties. Another consideration regarding these accounts is the designated beneficiary. Remember to update these designations after the divorce in order to properly preserve your accounts and achieve the desired stipulations.

Discuss Retirement Accounts

While these accounts may be one of the last things on your mind as you navigate your divorce, they are important to your future. It is best to discuss your retirement accounts with your divorce attorney as soon as possible. You will likely need to request records from your employers (or former employers) that indicate the specific dates of participation, along with the amount of money that was added. This information will be essential when determining marital assets.

Benefit and Contribution Plans

The distribution of funds will depend on the type of account that is utilized. There are two main types of accounts including the defined-benefit plan and the defined-contribution plan. With defined-benefit plans, the spouse may have the opportunity to take a lump-sum payment, called a “cash-out” value. Defined-contribution plans require calculation of vesting percentages. These computations can become complicated, especially when there are multiple accounts to consider. There are also other types of retirement plans that need to be reviewed during a divorce, such as military retirement accounts and government pensions. In general, couples must equitably distribute funds in any accounts that had contributions during the marriage.

Because of the highly complex nature of retirement funds in a divorce, it is critical that you discuss your accounts with a skilled divorce attorney as quickly as possible. If you are seeking a divorce, contact the Tampa divorce attorneys and bankruptcy lawyers at All Family Law Group, P.A. in Tampa Bay at 813-816-2232 for a consultation at no charge or email us.

By Lynette Silon-Laguna Google+

Bankruptcy and Divorce

Financial problems are often a complication that may have added to the stressful causes of a divorce. Divorcing couples who are deeply in debt may wonder whether they should file for bankruptcy before or after they dissolve their marriage. There is no “one size fits all” answer because there are so many factors that need to go into the decision. There are advantages and disadvantages regardless of when you decide to file for bankruptcy. However, it is best to understand your options by discussing the details of your case with a qualified divorce/bankruptcy attorney prior to making any decisions.

Filing during a Divorce

Filing for bankruptcy in the middle of a divorce can be tricky. When one spouse files for bankruptcy alone, the result could be that only his or her portion of the debts are discharged. This could leave the other spouse with quite a bit of debt to resolve. Furthermore, under divorce law you may still be responsible for your share of the debt to your spouse.  For this reason, it is best to come to a bankruptcy decision jointly, whenever possible. If you are having financial difficulties it is imperative that you let your divorce attorney know immediately, as it could affect the decisions of the divorce. 

Automatic Stay

When a bankruptcy is filed during a divorce, it puts an automatic stay, or hold, on the division of property. It does not impact the issues of child support or custody. The hold will lengthen the time it takes to obtain a divorce, since the financial debt matters must first be sorted out. This could take considerable time, in some instances. However, it may be beneficial to resolve debt problems rather than allowing them to have a negative influence on your long-term money situation.

Bankruptcy after Divorce

If you wait until your divorce is final to file for bankruptcy, you could still run into trouble. When a former spouse files bankruptcy after the divorce, creditors do not have to follow the divorce decree where debts were distributed. Instead, they will pursue collection of the debt with the spouse who did not file bankruptcy. Therefore, it could be beneficial to deal with the bankruptcy before finalizing the dissolution of marriage.

Careful Consideration

Since everyone’s marital and financial situations are unique, there is not one correct solution. As with most of the divorce decisions, the choice to file bankruptcy is filled with advantages and disadvantages. There are many important consequences of bankruptcy that need to be weighed before an informed decision can be made. An experienced divorce attorney is essential, especially in cases where there is a potential for bankruptcy.

Fresh Start

As you divorce you are likely looking forward to having a fresh start. You want to put your divorce and all of its baggage behind you. If you are struggling with debt before the divorce, it will probably still haunt you afterwards unless you take the steps necessary to resolve it. The decision to file bankruptcy is one of the most important choices that can be made as part of the divorce. However, it can be a new beginning, which would not be possible otherwise. Trust that your divorce and bankruptcy attorney will assist you in getting the new beginning you deserve. If you are about to go through a difficult divorce, count on the experienced legal team at our firm to assist you during this difficult time. Contact the Tampa divorce attorneys and bankruptcy lawyers at All Family Law Group, P.A. in Tampa Bay at 813-816-2232 for a consultation at no charge or email us.

By Lynette Silon-Laguna Google+

What’s Mine is Mine…Right?

One of the standard tasks in any Florida divorce involves separating the couple’s property. In some cases, the parties are able to accomplish this by agreement; that is, they determine themselves which one of them will take a particular piece of property. Where there is no agreement, the judge hearing the divorce action will make this determination. Dividing property between two divorcing spouses is not as simple as finding out to whom a particular item belongs, however. Property division can be complicated and require the assistance of an attorney.

The Basic Goal of Property Division

In a Florida divorce, the goal of a division of the property is for both parties to be awarded a fair and equitable amount of the marital estate or marital property. “Marital property” includes all property that was acquired by either of the parties during the course of the marriage, regardless of who actually “earned” it. So for instance, a wife who uses her income from her job to purchase two cars for the family has purchased “marital property.” If the couple later divorces, the cars are subject to division by the court because they are considered marital property, even though the wife purchased this property herself.

The division of property must be “fair and equitable” – that is, both parties must be treated fairly. This does not always result in an even 50/50 split of the marital property. In the example above, if one car is valued at $12,000 and the other at $15,000, it may be fair and equitable for each party to receive one of the cars in the property division.

Where Problems Arise in Property Division

In certain cases, property that is clearly yours can be subject to division as “marital property.” The assistance of an experienced family law attorney would be necessary to help you protect what is yours. For example, an inheritance you received prior to the marriage would typically remain your property after the marriage as it would be considered “non-marital property.” But suppose the inheritance is substantial (assume $100,000 for purposes of this example) and you deposit this money into a joint bank account used to pay your bills. Or you add your spouse as an authorized user to the bank account where this money is on deposit. In either case, the court may consider your inheritance to be marital property, which would subject it to division by the court at the time of the divorce.

How Can I Protect What is Mine?

The team of Tampa Florida divorce attorneys at All Family Law Group can help you protect your property before, during, and after a marriage. One way is by drafting and entering into premarital or antenuptial agreements, wherein each party agrees who will receive what property if a divorce occurs. We can also advise you how best to separate your property so that it is not lumped together with and considered as marital property. Contact us today at (813) 321-3421 for a free consultation to learn how our Tampa Divorce Lawyers can help you keep what is yours.

By Lynette Silon-Laguna Google+