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Dividing a retirement account in a divorce

Texas baby boomers who are facing the end of a marriage might also want to think about their retirement accounts. Even if they have been the sole contributor to the account, it will probably be considered marital property that will be divided in the divorce.

With the 2014 divorce rate twice as high among people over 50 as it was in 1990 and three times higher for those over 65, this is a growing concern. Furthermore, the value of a retirement account that has been maxed out throughout a person's lifetime can easily approach $1 million. One mistake a dependent spouse may make is failing to realize this worth and exchanging their share of the account for the family home. This can also be a poor decision financially because of the expenses of keeping up a house.

Other than Roth plans, most retirement account distributions are taxable, and couples should keep this in mind when they are looking at the value of an account. A person who is in a different tax bracket than the other might want to take a different amount for a more equitable distribution. Divorcing couples should review their beneficiary designations on these plans and other assets such as life insurance policies and make changes if necessary.

In a high-asset divorce, many other things may need to be divided as well including complex investments, real estate and even collections such as art. In Texas, the first step will be to determine what counts as marital property. For example, if one person received an inheritance that was not commingled, it might not be considered marital property. An attorney can often be of assistance to a divorcing client in this regard.

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