For as long as you have worked at your current job, you have made regular deposits into a retirement savings account. In fact, your employer may offer benefits such as annual matching bonuses that have helped you build your retirement savings.
How much you put aside likely reflects a carefully considered plan to ensure your comfort during your golden years. If you think that you may soon file for divorce, you likely feel worried about what would happen in a divorce. Could your spouse claim part of your retirement account in a Wisconsin divorce?
Retirement accounts are often at least partially community property
The Wisconsin family courts look at what you earned or purchased during marriage as community property. Regardless of who earns more money or has their name on an account, each spouse has an interest in that asset. Unless the two of you have a marital agreement that protects your retirement account, your spouse may have all right to claim some of the account’s value.
Whatever portion of the account you accrued during the marriage is very likely community property that you have to report to your spouse and share with them in the divorce. However, you don’t necessarily have to split the account. You can negotiate a settlement that helps protect your retirement.
If you go to court to litigate the divorce, there is no guarantee of how the judge might rule. You can take control over what happens to your retirement account. If you negotiate a settlement with your spouse or go through mediation, you can potentially set your own terms for dividing your property in the divorce. You could potentially retain the entire retirement account without splitting it, provided that you offer some concessions to your spouse in other areas.
What happens if you have to split the account?
Sometimes, dividing a retirement account is inevitable. The good news is that there are legal procedures that can help you avoid the taxes and penalties often associated with early withdrawals. Provided that you handle the account division in accordance with the property division decree and follow the right procedures, you can avoid losing even more of the account to penalties and taxes.
Understanding how Wisconsin handles your biggest assets can help you plan for your upcoming divorce.