If your marriage is on the rocks or you’re already in the process of a divorce, there are a few primary financial items to consider in regard to your wealth plan and marital savings accounts.
Retirement assets and employer stock options
Retirement plans, like 401(k)s, may not immediately jump to mind when you start to list all your joint assets, but it is an important and potentially complicated asset type to split as retirement assets come with special considerations.
A qualified domestic relations order (QDRO) is often used to divide certain employer retirement and pension plans; it does so by recognizing joint marital interest and giving the ex-spouse a share of those assets.
In a similar vein, if you or your spouse hold stock incentives from an employer, this may also require additional analysis before the assets can be divided. Valuing stock options is complex as they often carry vesting periods, unique tax considerations and various risks.
It’s important to talk with your financial advisor and other professionals when considering your individual case.
Education and savings plans
If you have children currently enrolled in college (or it’s on the horizon), you may have already discussed splitting tuition and other costs with your soon-to-be-ex-spouse. But there are a couple of potential wrinkles worth considering.
For example, if you have a 529 educational savings plan it’s important to recognize that it may not have more than one custodian (depending on the state). This can potentially lead to inequities within divorce agreements pertaining to 529 plans.
Going through a divorce has challenges, but you’re not alone when it comes to the financial considerations.