Many couples in Wisconsin who decide to divorce have discovered that untangling their financial lives is even more complex than separating their personal and emotional ones. Retirement funds are often the largest asset that belongs to a couple's marital property, and the distribution of these funds during a divorce settlement can be difficult and challenging, especially when both parties are dependent on these accounts for their future financial stability.
Even when both parties reach an agreement regarding the division of retirement accounts, the complex nature of the issue is not fully resolved. Retirement funds are governed by a number of financial regulations that cover a range of circumstances, including how they are to be dealt with during a divorce. When these rules and guidelines are not followed, couples could face serious impacts in terms of expensive penalties and costly taxation.
In order to properly divide a retirement account that is housed at the workplace of either spouse, a court order called a qualified domestic relations order, or QDRO, is necessary. This document provides specifics about the account and reflects the agreed-upon distribution in the divorce. A couple must request a QDRO from the court as it is not automatically issued with the divorce decree. When multiple funds are to be distributed, a separate QDRO is needed for each one whether it is a 401(k) or a traditional pension plan.
When going through a divorce, retirement funds are often the last thing on a couple's mind, but they can become a significant priority as the financial effects of dividing them become clear. A family law attorney can help his or her clients protect their interests and seek a fair distribution throughout the divorce process as well as draft necessary QDROs and work with the funds after the finalized order to ensure that any division is carried out appropriately and in line with regulations.