Posted on behalf of Jeffrey N. Greenblatt of Joseph, Greenwald & Laake, PA
People in Maryland know that divorce can be an expensive proposition. In Maryland, it means that a divorcing spouse is entitled to an equitable share of all marital property, which is essentially all property obtained during the marriage. When most people think about property division, the first thoughts tend to gravitate towards tangible items, such as the marital home. While real estate is indeed an important piece of the property division settlement, some of the most important pieces of marital property may be tucked away in a 401(k) or other retirement account.
Every American dreams of a comfortable retirement, which is why many people try to save as much as they can for when that day comes when they can set aside their careers and live their lives according to their own rules. Many people receive retirement benefits through their employer, and may also contribute to a separate retirement account. Of course, people also pay a substantial amount towards the Social Security system each month, with the expectation that one day they will be able to rely on these funds.
Over the course of a marriage these retirement assets can really add up and when it comes time for a divorce, the spouse may be entitled to a roughly equal portion of these assets as part of the asset division agreement. This can be very damaging for a person who has carefully saved and planned for their retirement, and as people get closer to retirement age they have even less time to compensate for these lost assets.
This is just one reason why people need to aggressively defend their retirement savings from a divorcing spouse. People who are considering divorce should make sure they understand how a divorce can affect their retirement plans and how to best protect their retirement assets during a divorce.
Source: New York Times, “Retirement Plans Thrown Into Disarray by a Divorce,” Constance Gustke, June 27, 2014