The Cost of Divorce: How It Can Impact Retirement

Divorce

There seems to be so much cost associated with divorce. How will it affect my retirement?

In any marriage that will be dissolved (otherwise known as a divorce) in California, a retirement plan or plans is/are subject to the community property laws of this state and may be subject to an equal division between the spouses.

This means that if you earned your pension or saved for your retirement plan solely during the marriage, you will need to share one-half its value with your ex-spouse, and the same would apply to any such plan(s) the other spouse may have acquired.

The Cost of Divorce—How California Law Defines Community Property

California law states that community property is:

Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. (California Family Code section 760).

If you earned only a portion of your retirement plan(s) during the marriage, such as earning some before marriage and some after you separate from your spouse, only the amounts earned during the marriage are to be equally divided. Amounts earned before marriage and after separation are the separate property of the person who earns them and will be awarded to them without dividing between the parties.

Separate property is described in Family Code sections 770-772, where you can see that other assets you may have acquired during the marriage may not be community property because you obtained the asset(s) by gift or inheritance.

The Cost of Divorce—Community Property & Retirement Plans

Of course, complications can arise when trying to determine just how much of any retirement plan is community property and how much is separate property.

You should keep good track of your records. If you are planning on filing a divorce case or filing a response to a divorce case, or otherwise participating in such a court proceeding, you need to get updated and accurate records that cover the entirety of your interest in any retirement plans.

If there is a problem determining each spouse’s respective interests in the plans, then hiring an expert may be necessary, though this can be quite expensive. Experts could include such professionals as actuaries, accountants, financial advisors, and certified financial analysts who specialize in divorce cases.

Retirement plans that can be affected by community property division are numerous and varied and include but are not limited to 401K plans, private or public pensions (like CalPERS), deferred compensation, military or civil service pensions, and Social Security retirement benefits. While the California courts do not make any decisions about Social Security, information on how those benefits may affect ex-spouses can be found here.

A San Diego Family Law Attorney Can Help Limit the Cost of Divorce

Whether you’re going through a divorce or need assistance with other family law matters, an experienced attorney can help.

If you’re ready to take the next steps in your family law case, contact JWB Family Law to schedule a free consultation.

The Importance of the CFLS Designation

A Certified Family Law Specialist, or CFLS, is an attorney who has obtained certification in the standards of California family law and demonstrated optimal legal competence. Attorneys who obtain this certification have specific expertise in all aspects of family law, which includes divorce or the dissolution of marriagechild and spousal support, child custody, and temporary restraining orders, among other areas of emphasis.

Not every attorney practicing family law has obtained this certification. In fact, the designation remains relatively rare—there are fewer than 2,000 CFLS attorneys in California and fewer than 200 in San Diego.

Surviving a second divorce

Finances tend to be more complicated as second divorces generally happen later in life when folks have accumulated more assets.

California divorce rates and facts

Recent divorce studies found that disagreeing about finances on a regular basis, lacking a college education, when one or both spouses are alcoholics, and being in a low income bracket are all linked with a higher divorce rate.

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