If you are going through the end of a marriage, nearly every aspect of your life undergoes some kind of change; even your professional status can be affected. It might not change your relationship with individuals at work, but both the expense and division of assets leads many professionals to revise their future plans and redirect their energies toward rebuilding. Nowhere is this truer than when a retirement account has been affected.
Minnesota as a marital property state
There are different laws in different states when it comes to property division. In some locations, all property is divided between the parties, because the law considers all property to be pooled once two people combine their households. In those states, a prenuptial or postnuptial agreement is necessary to circumvent that. As a marital property state, Minnesota only requires that the assets acquired during the course of the marriage be divided. This means a few important things, such as:
- Your investments and holdings from before your current marriage remain your own and, unless there are extenuating circumstances, you should not have to divide them.
- Any property acquired or wealth accumulated during the marriage may be subject to division.
- The court is charged with weighing the circumstances of both parties and coming to an “equitable” decision.
It is worth noting that the law’s requirements that the division is equitable does not mean all assets have to be divided equally. The court can take into account the balance of debts, obligations (including childcare), and other factors when weighing the decision.
Taxes, penalties, and other consequences
Apart from using prenuptial agreements and clearly documenting your assets from before the marriage, the other way you can preserve the value of your retirement accounts through your divorce is by carefully managing the process of dividing funds. There is a variety of tax penalties and fees that can affect the value of retirement funds, and only a few ways to roll your funds into a new account without having to worry about the tax implications or about losing value.
If you are going through a high asset divorce and are looking to preserve as much of your retirement account balances as possible, the best thing to do is to discuss your situation with a qualified and trusted divorce lawyer. That way, you can be sure you are getting the right advice for your situation, allowing you to keep your retirement account as healthy as possible throughout the proceedings.