Property division matters often lead to conflict in North Carolina divorces. Although more couples now draft prenuptial agreements before tying the knot, the average married couple won’t have any contract in place to simplify a divorce.
Instead, the couple will either need to negotiate with one another or had to court for litigation. Those contemplating divorce often identify specific assets that they want to keep or protect. Retirement savings can be very important for your sense of stability and your dreams for the future.
How much of your retirement savings may be at risk in a North Carolina divorce?
Much of the account may be marital property
When you want to determine how much of your retirement account you have to divide in a divorce, you must first establish how much of the account is marital property and how much is separate property. Generally speaking, whatever you added to the account during the marriage is marital property.
Contributions made before you got married, even if they are in the same account, will typically remain your separate property. While your retirement account may be a benefit offered by your employer and your name is the only name on the account, your spouse can still lay claim to a portion of the account’s value in your upcoming divorce proceedings. Exactly how much they can request will depend on how long you remain married and how much you added to the account during that time.
You can protect against taxes and penalties
When you withdraw money from your retirement account before you reach retirement age, you typically have to pay substantial penalties and taxes on those funds. You could lose a significant portion of your savings due to an early withdrawal. Thankfully, you don’t have to worry about those penalties if you handle the division process properly.
Having a lawyer draft a qualified domestic relations order and then filing that with the plan administrator will potentially allow you to divide the account with no penalties whatsoever.
You can plan to protect the account
For some people, keeping the retirement account as intact as possible is their top priority in a North Carolina divorce. If that is the case for you, then you may want to attempt to collaborate with your ex. Mediation could help if the two of you cannot reach an agreement directly or through your attorneys. When you have specific goals you want to achieve, an uncontested divorce filing is often the best option.
