Divorce is often emotional and overwhelming. Anyone going through a marital breakup may temporarily want to put aside thoughts about retirement, trusts, and wills for another time.
7 Tips in Managing Your Investments through a Divorce in Georgia
However, professionals suggest that people need to deal with both their emotional and financial well-being in this chapter of life.
From separating bank accounts to dividing assets, there is a lot that needs to be considered during this process.
If it is an uncontested divorce, the process becomes a lot easier. In case you’re wondering how much is an uncontested divorce in Georgia, it is about $4,100 when a divorce lawyer is hired.
On the other hand, if it is a contested divorce, the rate is much higher, and the proceedings often become messy.
However, in both cases, preparing for the process can make things less overwhelming.
Today, we are here with some tips that will help you manage and stay in control of your investments while working through a legal separation in Georgia. Let’s dig in.
1. Get Updated about Important Financial Documents
During a divorce, property obtained during the marriage is considered to be owned by both spouses and divided between both parties.
Therefore, you need to get updated about the extent of the household’s assets, even if you’ve never been involved with the family finances directly.
Get updated about the value of the family house and any other real estate, any businesses owned, retirement accounts of your ex-spouse (IRAs, 401Ks, and pension plans), and any other banking accounts or investments.
Know how each account is set up (in your name only, your ex-spouse’s name only, jointly held, or some other way).
Get the account numbers, contact information, login credentials, and other necessary information to access these accounts.
If your ex-spouse is reluctant to give you access to contracts, statements, and other documents, take help from your legal counsel to acquire the information.
You have the right and need of this information to make sure you get a fair and sufficient share of the assets.
2. Know About the Loans and Credit Cards
Along with all the assets, it is also necessary to evaluate all the liabilities.
Whether it is a huge loan or credit card payment, it is necessary to find out the contribution to those expenses by each partner and pay off any debts.
3. Update Beneficiary Designations
Every retirement account, annuity, and insurance policy holds a beneficiary designation. This determines who will receive the proceeds when the original owner dies.
If you own insurance or have other accounts where you have made your spouse the beneficiary, it would be wise to change this before the divorce is finalized.
Contact your financial professional and erase your spouse’s (or ex-spouse’s) name, and designate one or more new beneficiaries.
This will help avoid a complex situation for all parties involved.
4. Consider the Taxes and Other Costs or Penalties
Consider the financial consequences before you sell any assets.
Selling securities may trigger capital gains taxes, and early liquidation or exit from certain investments, such as retirement accounts or annuities, may come with steep penalties.
The question of timing is also there. If your divorce occurs during a market decline, it won’t be wise to sell any asset at that time.
5. Dividing Up Retirement Accounts
Splitting up retirement accounts usually involves liquidating assets and giving them to one or both spouses.
Dividing these assets gets a little complicated as several pieces of information are needed, and several rules apply to depend on the type of account.
To divide employer-sponsored 401(k), 403(b), or pension plans, a Qualified Domestic Relations Order (QDRO) is needed to provide to the plan administrator (typically your employer).
Even though every plan has its guidelines, a QDRO usually lets the funds in these kinds of retirement plans be separated and withdrawn without penalty.
However, there is no QDRO when it comes to dividing up IRAs. IRA plan assets are distributed based on the terms of the separation agreement or divorce decree.
In a divorce, the only way to divide an IRA without incurring taxes is to get a court-ordered divorce decree and to roll the separated funds into new, separate IRAs.
While dividing assets, it is important to consider the different tax outcomes attached to Roth IRAs and 401Ks in comparison to traditional accounts.
These differences need to be considered given both the recipients’ tax brackets, both currently and in the future.
6. Splitting Up Taxable Investment Accounts
In Georgia, based on the type of investment account, dividing the assets between spouses takes different processes.
For taxable accounts, like a jointly-held brokerage account, you need to provide the financial institution a letter requesting that the joint account be closed and new, separate accounts be opened for each person.
The letter must contain details on how the investment assets will be divided between the two accounts.
If any party is interested in moving assets to an account in a new institution, it is necessary to note that certain assets like insurance products or proprietary investment funds are not transferable.
Moreover, liquidating such products may result in taxes, penalties, and fees.
In case you’re worried your spouse may take action before you’ve come to terms regarding investments or withdrawals from a joint brokerage account, you can contact the financial institution and ask that the account be frozen until you reach an agreement.
7. Take Help from the Professionals
You may think about asking for guidance from a lawyer, accountant, or another financial professional with the right experience with estate planning and other investment-related issues to avoid any overwhelming situation while dividing financial assets during divorce.
Make sure to carefully vet any financial pros before working with them.
Conclusion
In conclusion, the financial implications of divorce later in life can be devastating. Therefore, you must have greater assurance, both about your legal rights and about the financial resources that will be available for you as you begin your new phase of life.
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