The valuation of assets in a divorce can be critical. But, when a person thinks of their most valuable possession, what is the most likely answer? For some, the answer might be the family home and accompanying real estate. However, according to a recent article, for many the answer is their retirement accounts and pensions. Not giving these assets their due during the division of property could be a big mistake.
According to the report, people who have gone through a divorce are more likely to have less money to retire on than those who do not divorce. The reason? It can cost more for a newly single person to carry on with the same standard of living as they enjoyed during a marriage, therefore reducing the amount of money they can sock away in bank accounts for retirement.
The article goes on to suggest that making retirement accounts a priority during asset division negotiations – even above and beyond the home – can ultimately be the best strategy for long-term financial security. And, if a re-marriage comes along down the line, it can be wise to have a prenuptial agreement which specifically states that those accounts will remain in separate hands.
Property division always has the potential to be contentious during divorce proceedings. This is even more likely to be the case in complex property division, which involves things like artwork, business assets or retirement accounts. Almost no one goes into a divorce hoping the process will be drawn out and result in lengthy – and expensive – litigation. For most couples, a negotiated settlement is the best way to resolve the end of a marriage. The tip from the article can be important though – a spouse may want to make the retirement account their first pick in the asset division negotiations.
Source: CNNMoney, “Rebuild your nest egg after divorce or widowhood,” Beth Braverman, Donna Rosato and Penelope Wang, Feb. 18, 2013