Dissolving a marriage can be a highly emotional and challenging process, regardless of the age of those involved. However, for individuals in Michigan who have accumulated substantial amounts in retirement accounts, there may be additional factors to consider before entering negotiations for property distribution. Taking the time to gain an understanding of how retirement assets are divided could help a person avoid potentially devastating tax penalties.
While retirement funds that are present before a marriage may maintain their separate identity, those gained throughout the relationship will likely be deemed marital assets. When a couple in Michigan decides to part ways, marital assets will be divided in a fair and equitable manner. However, the process may be a bit more complex than simply removing the agreed upon amount and giving it to one’s former spouse.
Certain retirement accounts require one to obtain a Qualified Domestic Relations Order before dividing funds, while in others, a person may only need to obtain a divorce decree. These steps should not be taken for granted, as attempting to divide funds without the necessary documents can result in disastrous tax penalties and fees. Divorce can be difficult enough on its own, and those who are going through a similar situation may find it beneficial to avoid suffering any unnecessary consequences.
Along with being a stressful and intimidating period in life, the end of a marriage can also be a complex one. With numerous crucial areas to cover, seeking guidance in the initial stages is likely in one’s best interests. By speaking with an attorney with intricate knowledge in property distribution, as well as every other aspect of divorce, a client in Michigan could become better prepared to pursue the most favorable outcome possible during legal proceedings.
Source: marketwatch.com, “Getting Divorced? How to avoid tax pitfalls when splitting up retirement accounts“, Bill Bischoff, Accessed on Aug. 28, 2017
