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  • divorce and designated beneficiaries

Divorce and Designated Beneficiaries

Married couples typically name their spouse as the beneficiary on their company 401(k) plan, individual retirement plans, annuities, life insurance policies and other accounts with designated beneficiaries. It’s important to keep in mind that a divorce does not automatically change all your designated beneficiaries. The best way to avoid potential problems in the future is to make a note to update your beneficiaries after your divorce is final.

There is so much going on during a divorce that one of the easiest mistakes to make is to forget to update the beneficiary information on all accounts. The result of which is often realized too late, when years later a family member is told that your ex-spouse will receive all assets from a retirement or pension account.

In the case of a life insurance policy, remember that the divorce judgment itself does not automatically cancel a spouse’s right as the beneficiary. To remove the ex-spouse as the beneficiary, the insurance company may require the spouse’s consent or a clearly worded divorce judgment stating who owns the insurance policy, who shall be the beneficiary, or who has the right to designate the beneficiary.

If you are currently in divorce proceedings, you have to wait until the divorce is final to make changes. However, immediately after the divorce is final you are free to make changes and it is in your best interest to make those changes sooner rather than later.

If you are unsure whether or not you want to update your beneficiary designation, you should set a reminder in your calendar for one year later to remind you to revisit the issue and make changes if you need to.

Contact Brett Thorsteinson, your trusted divorce and family law attorney to help you with your divorce. Brett listens to your needs and works diligently to protect your interests.

What is a Qualified Domestic Relations Order?

In California divorce proceedings, courts must divide the community property equally between the spouses. It doesn’t include separate property, which is property owned prior to marriage and property acquired by gift, inheritance, or after separation. It involves community property relating to retirement benefits. When it comes to dividing retirement benefits, courts must issue whatever orders are necessary to make sure both spouses receive their full community property share of any retirement plans, which might call for a Qualified Domestic Relations Order (QDRO).

A QDRO is a special type of court order that divides certain retirement plan benefits in a divorce. In a participants retirement plan (In QDRO language the person whose interest is being transferred is called the “participant”) the QDRO creates the existence of an alternate payee (a payee is a person to whom the interest is transferred) and their right to receive all, or a portion of the benefits payable with respect to a participant under a retirement plan.

A domestic relations order is a judgment, decree, or order in a divorce that relates to the provision of child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant. A QDRO is issued in addition to a marital settlement agreement (MSA) or final judgment permitting your divorce. It contains specific directions to the retirement plan administrator regarding how the plan should be divided between the spouses and/or payees. It’s essential that your QDROs are accurate and complete or you may not be able to receive them later.

If you are considering dividing your retirement benefits and need guidance with the Qualified Domestic Relations Order, please contact Thorsteinson Law Group to help you. We provide complimentary consultations, and are dedicated to helping you through the divorce and post-divorce process.

  • high net worth divorce

What Not To Do in a High Net Worth Divorce

In a high net worth divorce, the list of assets is so large that divorcing couples find they agree on dividing some things, but not on others, and neither wants to budge. Stress is high when large amounts of money, property, businesses, assets and other items are at stake. The divorcing party can be very emotional and often feels betrayed, angry, aggrieved, disappointed and might let these emotions influence their decisions.

These factors create a recipe for mistakes on both sides of the divorce, which have long-term effects on both spouses and/or their children. Here are a few things to avoid during a high net worth divorce:

• Guilt: When a spouse wants a divorce, they are bound to feel guilt for the other, despite justification. The spouse feeling guilt tends to give more money than hey should. When it comes to financial assets, decisions should be made similar to dissolution of a business rather than with emotions.

• Agreeing to anything to be out of the divorce: A spouse filing due to domestic/physical violence, or being in love with someone else is willing to do anything to be away from their current spouse. It is important to have a thorough analysis because this can lead to damaging effects on you financially.

• Failing to account for, or hiding assets: It is common to want to hide or transfer assets in a high net worth divorce. Transferring valuable assets to another person, such as, a business partner, will be seen as fraudulent and you will lose credibility in court. It is important to take the research process seriously for the law mandates the financial documents you find.

• Listening to non-professionals: During difficult life changing experiences, we often seek council from the people closest to us. While that might be good for your emotions, it may not be the best legal and financial advise you can get. Everyone’s experience is different and in a high net worth divorce, protecting your financial assets is key. Seeking professional guidance in the specific areas or getting a team together is a step in the right direction. Keep in mind that laws change and every judge is different.

These are only a few mistakes made in high net worth divorces, most all of which can be prevented when you hire a good divorce attorney.

Contact Thorsteinson Law Group to help you protect your net worth in a divorce. We provide complimentary consultations, and are dedicated to helping you through the divorce process.

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Military Retirement and Pension in a Divorce

Military assets are divisible in the case of divorce just like any other asset in a California divorce, provided the court has jurisdiction over the proceedings. It’s important for couples going through a military divorce to have a good understanding of how California divorce courts handle the division.

In 1982, the Uniformed Services Former Spouses’ Protection Act (USFSPA) was passed by Congress which gave state courts the ability to choose how or whether to divide military assets in a divorce, legal separation, or annulment.

In order to divide military assets the court has to have the authority to do so from the military spouse’s consent or the fact that the spouse is a legal resident in a California. A military member being stationed in California does not mean they are a resident and therefore does not automatically grant consent. However, the court is allowed to reasonably assume consent from both spouses in the divorce proceedings.

California divorce courts can divide a service member’s military retirement as long as the court has jurisdiction. This authority is not limited by the length of a marriage.

Contact Thorsteinson Law Group  in Long Beach or Huntington Beach to help you with your divorce. We provide complimentary consultations, and are dedicated to helping you through the divorce process.  Brett Thorsteinson is a divorce lawyer who will advocate for your rights.

Pension and Divorce

A pension is an investment fund to which a person, or their employer has contributed during their working life and is received as payments during that person’s retirement. During the years of employment, monetary contributions are made to a retirement plan, and once retired it because a “pension”; basically a tax deferred savings plan. In a California divorce, the rules relating to the division of pensions are complicated. Generally speaking, a pension earned during marriage is considered to be a joint asset of both husband and wife.

If a pension is divided between divorcing spouses, it must generally be done at the time of divorce when other marital assets are divided. However, if you were to withdrawal money earl from a pension or retirement account, there can be extreme tax repercussions. However, there are federal provisions that help spouses to divide these retirement plans and avoid tax penalties.
The legal tool most commonly used is called a Qualified Domestic Relations Order (QDRO). It allows a state court to split any qualifying benefit plan or pension plan between spouses. Most retirement plans will pay pension benefits directly to divorced spouses if the domestic relations order meets certain requirements.

In some situations spouses choose not to use a QDRO and instead evaluate a pension plan or 401(k) plan to determine it’s value based on it’s holdings on a given date. For some types of plans, however, experts are necessary as complex calculations involving life expectancy and the rate of return of the plan’s assets are used to arrive at the current evaluation.

Contact Thorsteinson Law Group in Long Beach or Huntington Beach to help you with your divorce. We provide complimentary consultations, and are dedicated to helping you through the divorce process. Brett Thorsteinson is a divorce lawyer who will advocate for your rights.