There are few experiences as painful and frustrating as divorce. The dissolution of a marriage can bring many challenges, including the confusing issue of dividing retirement assets. You may find yourself asking, “Is my wife entitled to half my 401(k)?”
While the process of divorce can be overwhelming, it is important to remember that it is not uncommon. In Santa Barbara, the divorce rate is around 7%, and the process is governed by a strict set of laws and regulations to make it as equitable as possible.
Community Property in California Divorces
Divorce in California follows the “community property” system. This states that assets acquired by a couple during their marriage are equally owned, so they are, therefore, subject to equal division in a divorce. Any assets gained before or after the marriage are considered separate, so they are not subject to this division.
401(k) Divisions
Retirement funds are recognized as shared property within the “community property” system. These include 401(k)s, IRAs, pensions, profit-sharing plans, and certain benefit plans. It is important to remember that this division only applies to assets accrued during a marriage.
For a 401(k), only the savings deposited into the account during the marriage, and its subsequent growth, may be legally divided with a spouse. The value of a 401(k) before marriage, and afterward, is considered separate property, so it cannot be accessed by a spouse.
The way 401(k)s are split is usually through a “Qualified Domestic Relations Order” (QDRO). This is provided by a judge, and it allows the non-payee spouse to gain access as a recognized “alternate payee.” When the “alternate payee” spouse has gained access, they may choose to take it as a distribution payment or roll it over into their own retirement plans.
Ways to Safeguard a 401(k)
There are several ways an attorney can assist in safeguarding a 401(k). One of the main approaches is a “Marriage Settlement Agreement” (MSA). This is an out-of-court agreement between all parties on how a divorce will proceed, including issues like the division of assets and retirement funds.
If both parties can come to an agreement that either provides alternatives or a reduction in the payout of a 401(k) to an “alternate payee” spouse, they can submit this to the judge when finalizing the divorce. This process may amend or void the issuance of a QDRO.
If an MSA has not been reached and a divorce does go through courtroom litigation, it is important to know that an “alternate payee” spouse does not have immediate access to the funds of a 401(k). During divorce proceedings in California, an “Automatic Temporary Restraining Order” is put in place. This prevents the withdrawal or transfer of retirement funds by one spouse from another’s accounts. This can afford time for attorneys to present their cases for their clients.
Finding the Right Lawyer
Divorce can be a painful and emotionally draining process. During such a time, it is important to have an attorney who can be a fierce advocate on their client’s behalf. Ideally, they can also communicate the most effective strategies available and provide guidance on how to go forward.
An able divorce attorney should have experience within their field and a long record of success. They should clearly convey the processes their client will face, along with the benefits and drawbacks of certain strategies. Lawyers are bound by a fiduciary responsibility to act in their client’s interest. They must always be open and transparent in how they are conducting a client’s case, and your attorney should always be ready to answer any questions you may have.
At Drury Pullen Law, we have been serving the people of Santa Barbara for over a decade, assisting clients with a wide range of legal concerns, including divorce. A Santa Barbara divorce attorney from our firm can offer guidance on ways to move forward, including with the division of assets.
FAQs
Q: How Much of My 401(k) Will My Wife Get in a Divorce?
A: The amount a divorcing wife may get from their husband’s 401(k) depends on a few factors. Foremost amongst these is the amount that has accrued into the account since the time of the marriage. Within California, assets accrued during a marriage’s lifetime are split 50/50. This includes retirement funds, such as a 401(k).
Q: How Does a 401(k) Get Split During a Divorce?
A: To understand how a 401(k) gets split in a divorce, it is important to know the community property system that California follows. In this system, any assets acquired during a marriage are split between the divorcing couple. This applies to the contributions made to a 401(k) during the time of their marriage. It is important to understand that any contributions made to a 401(k) before marriage are not subject to this division.
Q: What Is the Ideal Way to Get Through a Divorce?
A: While there is no “ideal way” to get through a divorce, there are some successful strategies for doing so. First is to have sound legal counsel who’s prepared to protect your interests. Another is to adopt a constructive mentality. Do not expect to “win” against your spouse; this only creates acrimony that can make proceedings harder. Instead, be prepared to work together to find resolutions that recognize what each party is legally entitled to.
Q: How Long Do You Have to Be Married to Get Half of Your Spouse’s 401(k)?
A: There is no minimum length of a marriage that entitles a spouse to half of the other’s 401(k). In California, divorce laws and the division of property apply equally to couples who are newly married as to those who’ve been married for longer. However, these laws only apply to property accrued during a marriage. Therefore, shorter marriages will likely have fewer assets to divide during divorce proceedings.
Contact Drury Pullen Law
While divorce can be intimidating, it is important to remember you are not alone. Since 2010, over 300,000 people in Santa Barbara have faced divorce. At Drury Pullen Law, our talented lawyers have a strong record of success, and we are prepared to provide you with informed counsel. Contact us today to learn more.