The beginning of the New Year proves to be a popular time for divorce. The holidays are over, the bills are in and many people have started (and already stopped) their New Year's resolutions. James McLaren, president of the American Academy of Matrimonial Lawyers shared, "We see a significant increase in people seeking out divorce advice and, ultimately, filing. The number of filings is one-third more than normal."
Your 401K after Divorce
It's January. Time for people to take stock of their weight, love life, and financials (among other topics). Maybe you're envisioning a future that doesn't include your current spouse. And maybe you want to start saving more money for that future and are looking for ways to increase your savings. Upping your 401K percentage is one good way to do this. As Texas divorce lawyers we would like to share this free tip: you might want to hold off on the latter if you're thinking about the former. One of the most common types of employee benefits today is the 401K. Employers usually match a percentage of your investment (think free money!), and the money that goes in stays tax-free until it is withdrawn. These two benefits make it an attractive retirement savings option. Outside of home ownership, it is often the largest investment a couple has and can play a significant role in a divorce settlement. Along with Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin, Texas is one of the nine community property jurisdictions in the United States. Community property is all property and assets gained during the length of a marriage. Almost anything of value acquired during the marriage is considered community property. A 401k plan can be acquired before marriage, known as separate property, or acquired during the marriage, known as community property. Sometimes these values need to be researched to decipher these divisions. This is an arduous task best done by an attorney. The process would start with the attorneys gaining access to your (and your spouse's, if they have one too) 401K's year-end statements. The assets will be traced back to the beginning of the marriage to decipher how much of the investment is community property. If contributions started and were only made during the marriage, then all of it is community property. Much of a 401K will be community property for long marriages and first marriages with a couple who started out together. Sometimes a 401K can be a combination of community property and separate property. Some number crunching will be necessary to figure out the how the 401K is divided if this is the case. Once this is decided a lawyer will draw up a Qualified Domestic Relationship Order. A QDRO describes the details of the 401k property division. A QDRO is prepared and then sent to the 401K Plan Administrator. The Plan Administrator then grants the alternate payee (ex-spouse) with an ownership stake in the 401K. Two separate accounts are then created. Each divorcee is now in charge of his or her own account and can allocate and handle the funds in the way he/she sees fit. If you are thinking of bumping up your 401K and are thinking of getting a divorce, you might want to wait until those papers are signed and assets are divided. Or else you will only be taking a portion of the 401K bump up away. The division of a 401K and other investments during a divorce can be confusing and cumbersome. At Puhl and Berbarie we are well-versed in dividing assets and getting a fair divorce settlement. Please feel free to call us for a free consultation.
Contemplating separation but not sure about Cost of Divorce?
Now that the holidays are over, there are no more distractions so it's time for a game plan. You may be considering ending your marriage and wondering what the cost of divorce entails. It's no wonder this thought crosses your mind with so much sensationalized news about celebrity divorces in the media. It cost Madonna $75 million to part ways from Guy Ritchie in 2008, and Mel Gibson spent $425 million when saying farewell to Robyn Moore in 2011. As for the most expensive? That would be Alec Wildenstein, a French art dealer, racehorse owner and businessman whose divorce costs were estimated around 2.5 billion dollars. These numbers are obviously inflated thanks to the celebrity and excessive wealth of these divorcees, but it does make one pause before jumping into the pool feet first. How much does a divorce cost, really? The answer is a tough one. Cost of divorce varies widely. There are so many factors, and divorces are as unique as thumbprints. For instance, where you get divorced affects the costs. California and New York are amongst the most expensive states to get divorced. As for one of the most expensive cities: Las Vegas, which ironically also has one of the quickest processing times in the country too. There's a reason the city has been dubbed the "divorce mill." If you happen to live there, you can always play to win one of their reoccurring "free divorce" radio contests, though the odds are terrible. Aside from these high-costs locales, an average divorce will ring in at $15,000 to $30,000 dollars (this according to a recent Forbes Magazine). This includes lawyers, filing fees, experts, real estate costs, financial advisors and, if needed, family therapy. But if your assets are complex, your divorce will be too. You may require niche experts, especially if you share a business. You'll need to call on forensic accountants and business evaluators to divide your assets equitably, and then you'll need to pay them. If children are involved, it adds an entirely different dimension. Custody battles can be ongoing, and your costs are not finite unless you and your ex-spouse come to a lasting agreement. Longevity and circumstances in a marriage may also be a determining factor of costs. Texas awards alimony, though it's called "spousal maintenance" here, and it depends on things like: how long you've been married, if there were instances of domestic violence, and if you have a special needs dependent. Uncontested divorces are the cheapest for obvious reasons. If you're walking the middle ground between uncontested and embattled, mediation can be a cost effective solution as well. At the end of the day, it's imperative to find a good family lawyer. Here at Puhl and Berbarie we recognize that we're a cost, but we strive to be an investment instead. We're here to protect you and your finances, and pride ourselves on this reputation. So, if you're considering a divorce but don't know where to start, start here. We will take good care of you so that in the future you have what you need to take care of yourself. Call (972)569-3166 for a free consultation from one of our family lawyers.