The end of the marriage comes with a series of endings and separations. One of the separations comes when the two individuals separate any joint savings and retirement accounts. Property division can be tricky, and it isn’t always easy to know what is equitable. Plus, there are tax rules and Social Security rules to be conscious of. People in Wyoming considering divorce may wish to research the best strategy for dividing assets before making any major financial moves.
Some individuals may be tempted to dip into the retirement accounts to pay for the costs of the divorce, but this is not recommended. Not only is it possible that a person will pay a tax penalty, but there is an additional ten percent penalty if a person withdraws from the retirement fund before the judge orders the assets divided. Financial advisors recommend that couples preserve the savings for now and instead begin to tally the amounts of the various accounts in order to get the full picture of the financial situation.
Once the separation of assets is agreed upon, either by the couple or by the judge, it is important that the proper paperwork is filed through the correct channels for the separation. When IRAs are split as part of a divorce proceeding, there is no tax penalty. For Social Security, an ex-spouse is able to claim benefits on the other ex-spouse’s record as long as certain conditions are met.
Property division in Wyoming will be subject to state and federal laws about each type of asset. For guidance on the conditions and procedures of the separation, many individuals seek outside help. An experienced family law attorney offers this exact type of service to individuals going through divorce.
Source: The Motley Fool, “How to Protect Your Retirement Savings During Divorce“, Sarah Szczypinski, Accessed on Sept. 20, 2017