If you and your spouse in California have decided to get divorced, one of the first moves you should make is to modify your retirement accounts. Sorting through the financial implications of how your property must be divided will save you a lot of heartache later on when property negotiations begin in earnest.
How California divides property
California is a community property state, meaning that anything that a couple acquires during their marriage must be divided equitably in a divorce. That rule doesn’t necessarily mean that every asset must go through a 50/50 division. However, knowing what assets were yours before you tied the knot is essential as anything you amassed before getting married will not become part of your divorce settlement.
Managing your retirement plans
First, compile a summary document outlining all your retirement plans and their inception date so that you can accomplish an appropriate property division. This move will allow you to know how much you and your spouse have saved and what, if any, accounts are yours alone. Be prepared to furnish details about your retirement account balances plus summary descriptions from plan administrators.
Creating new retirement plans
Once you have decided what retirement plans are subject to division, you must transfer the appropriate portion to your spouse. Determining what you are both entitled to is an essential part of your divorce settlement. You’ll also need to create new retirement accounts that reflect your status as a newly divorced individual. It’s a good idea to draw up a new plan as soon as possible so that you get a good picture of how this life change has affected your retirement.
Remember to update your beneficiaries too. It’s a good idea to create a checklist of things that you will need to take care of so that you don’t miss anything.