J. Gregory Hatcher | Charlotte, N.C. Managing Partner & Board Certified Specialist in Family Law
When divorcing spouses divide their assets, it is a mistake to believe that all assets have the same monetary and present-day value. Liquid assets; such as bank accounts, are the most valuable because they can be converted easily with no tax or other penalties. Turning retirement accounts into cash likely requires a tax and a penalty. Consequently, those accounts are thought of as less valuable since the spouse would receive a reduced amount. However, a case can be made for loading up on retirement accounts during the dissolution of a marriage.
Unless you plan to work for the rest of your life, there will come a time when you need the value of your retirement account to help pay for your needs and expenses. When the marital estate is being divided, retirement accounts may not come off as the most appealing, but they may ultimately be more valuable in the long run. If a retirement account is allowed to remain whole and gain value over time, the asset can prove quite formidable. A recent article in The Wall Street Journal surveyed a number of newly retired Americans. Participants were asked about the biggest surprises they faced in retirement. The results of the survey pointed to finances being the overwhelming surprise for retirees. While some were pleased to realize they planned appropriately to cover their cost of living, many more were concerned they had not saved enough money.
When a party is dividing assets during their separation, he or she should utilize the assistance of an experienced legal team. It is important to be aware that your legal team does not necessarily have expertise in dividing retirement accounts. Often, a choice has to be made between a series of different investments and division amongst the parties. During these times, it is wise to consult with an independent financial advisor and divorce planner. A person with the proper experience and no potential financial gain can help decide which accounts are best for you while considering such factors as your age, occupation, needs, expenses and projected working career.
If you have questions about equitable distribution, separation, divorce or other family law matters please contact us.