Westside Family Law

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Property division extends to retirement savings

One of the cornerstones of the modern Canadian divorce is the division of assets and debts. This is true of most divorcing British Columbia couples, regardless of age or status. However, it is easy to overlook in the contentious world of property division that not all assets are physical in nature. Indeed, a retirement "nest egg" is subject to the same rules of division as a car or a family home. 

It is important for couples seeking a divorce to address retirement plans early in the game, because a failure to do so can have negative implications on taxes and other financial planning for both parties in the future. However, it is also important to understand that the type of retirement plan can dictate how divorce law will impact that division. For example, an IRA is handled differently than a qualified plan. 

As a retirement plan is often the biggest liquid asset to be divided in a divorce, it must be handled carefully. Depending on the specifics of the divorce agreement, this may include transferring funds from one IRA to another, or dividing a qualified plan like a 401(k). If handled incorrectly, both spouses may be hit with penalties for unintentional distribution, which can end up costing both parties considerable money that could have been put toward their golden years. 

Property division as it pertains to divorce law can be extremely complicated. This is why British Columbia residents who are undertaking divorce proceedings can benefit so strongly from the support of experienced divorce attorneys to navigate a fair division of property, including retirement planning. This can help to secure the futures of both spouses as they move forward in their single lives. 

Source: Forbes, "Divorcing? How to Split Up Retirement Nest Eggs", Duncan Rolph, Nov. 23, 2016

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