Minnesota residents facing divorce might think to themselves that it makes financial sense to do a low-cost, do-it-yourself divorce. They may believe it’s as easy as splitting any retirement accounts and pensions equally and walking away. What many don’t realize is that dividing pension and retirement funds without having proper legal agreements could leave one or both parties looking at some expensive tax bills or hefty penalties.
Most people looking for the do-it-yourself divorce know nothing about a ‘qualified domestic relations order.” This agreement gets filed with the divorce and allows divorcing individuals to move money from their retirement and pension accounts without additional taxation or early withdrawal fees. There are other tax considerations that most people without legal experience have no concept of that could save divorcing individuals money.
In a lot of cases, the do-it-yourself divorce ends up being more expensive in the end. The divorcing couple ends up needing to hire attorneys to clean up the mess that they’ve made, especially when retirement funds are involved.
The best bet for divorcing couples who have pensions and retirement funds in play is to work with an attorney who is experienced in financial issues. Getting a QDRO prepared by a lawyer may cost a few hundred dollars, or even a few thousand dollars, but this price pales to the amount of money that could be lost by not having a professional take this relatively simple step.
In a high-asset divorce, a family law attorney is going represent their client in the divorce proceedings. They will work with their client in drawing up or reviewing documents, such as the QDRO. The family law attorney may provide their clients advice on what to do with shared accounts, how to divide property, as well as practical legal and financial advice on situations that arise during the divorce.