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The impact of a Washington divorce on your retirement

You spend much of your adult life saving funds in the hope of having a secure and comfortable retirement. Now, sadly, you and your spouse have reached an impasse and divorce seems inevitable. You're probably worried about a number of things, from who gets primary physical custody of your children to the best way to divide your assets and your various debts, like credit cards.

Your retirement accounts and pension should be a major focus of this consideration, as careful planning is the best way to ensure you and your spouse can still have a proper retirement, even after your divorce get finalized.

The more contentious your divorce, the more the process can end up costing both of you. High asset divorces, including those with pensions and retirement accounts, can consume a substantial portion of your assets if you aren't careful. Many couples, especially those close to or over retirement age, can find themselves in financial difficulty following a divorce. Retirement accounts are often not sufficient to provide for two separate households. Rent or mortgage payments for individual homes can create a major financial drain, even for those who had planned carefully for their golden years.

Washington courts try to split retirement funds fairly

Every state has different laws and rules surrounding the division of assets during a divorce. Washington is an equitable distribution state, which means that the courts will try to divide assets and debts fairly. Fairly does not always mean evenly. Typically, the courts will exempt both assets and debts from before the marriage, but any debts or assets accumulated during the marriage will get split between the two spouses. Typically, this includes retirement accounts and pensions, even if the account got started before the marriage took place. Only deposits from before the marriage are exempt from division.

In the case of military divorces, typically those who have been married ten years or longer can receive half of the pension under military rules. The courts, depending on circumstances like the number of children and the ability of the non-military spouse to support the family, may award more than that. Most pensions and retirements accounts will get split up by the courts during the divorce, unless there is a prenuptial agreement that protects those assets from division. Thankfully, the IRS allows for fee and fine-free division of both Roth IRA and 401K accounts if done properly as the result of divorce.

Careful planning and negotiations with your spouse are necessary if you both hope to retire as planned after a divorce. Understanding what you should receive can help you push for a better outcome to the asset division process, especially when it comes to retirement accounts. Remember that regardless of who started the account or made the deposits, if the account grew during the marriage, it will most likely get treated as a marital asset that is subject to division.

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