Kevin Qualls Family Law
Maintaining Professionalism. Preserving Civility. Finding Answers. Practical Guidance On Important Divorce And Custody Matters

How does divorce affect debts and retirement assets?

Readers of this divorce and family law blog may appreciate the importance of an attorney’s assistance during property division negotiations. For spouses that took a less active role in the household finances, that legal assistance can also serve as a safeguard against overlooking potentially important issues.

For example, an attorney can provide an outline of how a divorcing spouse should approach joint debts and liabilities. An attorney can work with financial experts and request a credit report in order to obtain an inventory of all the debts and/or creditors to which a spouse might be liable.

In the case of a joint mortgage, the decree of the divorce court assigning liability to only one spouse does not automatically force the lender to release the other spouse. Said another way, there is a pre-existing contract between the two spouses and the lender. In order to effect the terms of a divorce agreement (and remove one of the spouses from the contract), the mortgage may need to be refinanced. The same approach may need to be taken with a joint credit card.

Retirement accounts can be another problematic area for divorcing spouses. Although each spouse may have their own 401(k) or other employer-sponsored retirement plan, the fact remains that spouses may have been estimating their financial liquidity in retirement based on their pooled assets. Similarly, pensions are also part of an employee’s earnings, even if they don't generally vest until retirement.

With the help of an experienced retirement asset division attorney, a spouse may be able to petition the court to have a pension deemed joint property -- and divided equally between the spouses. 

No Comments

Leave a comment
Comment Information

Kevin Qualls Family Law
625 The City Drive South
Suite 470
Orange, CA 92868
Toll Free: 800-783-1934
Fax: 714-750-5983
Map and Directions