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Using a QDRO to divide retirement assets

Many spouses who are separating in California will say that the divorce process can be emotional. Unfortunately, high stress and anger can lead to poor decision making. At the time of dividing assets and liabilities, it is important to reign in emotions and consider financial issues rationally and intelligently.

Many spouses have the false impression that retirement benefits are the sole property of one party. In California and elsewhere, most retirement benefits that have accrued during a marriage are considered marital property. The rationale is simple: If marital assets, including wages, are used to fund a retirement account, the fruits of that account should be in the marital estate.

For this reason, traditional pensions, IRAs, 401(k)s, federal thrift savings accounts and other benefits are subject to division. One exception is Social Security, which cannot be divided in a divorce. However, under Social Security law, one spouse may claim benefits under the other's accrued benefits, provided that they were married at least 10 years.

Retirement benefits can be divided in a number of ways. For example, a percentage of an account may be set aside or a dollar figure may be used. To accomplish the division, a Qualified Domestic Relations Order will be necessary. As a separate document from a divorce decree, the QDRO contains technical information and specific language.

Someone who is going through a divorce may want to obtain legal representation. An experienced attorney will become the rational and skilled advocate of the client. They can consider the big picture and include all assets in negotiations. Furthermore, the attorney could make sure the QDRO is prepared correctly and submitted properly to the proper parties.

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