If you live in Colorado and are going through a divorce, you may need to take steps to protect your finances. You should start with a clear picture of everything you own, including vehicles, art collections, retirement accounts and other investments.
Issues with retirement accounts can be particularly complicated. It may come as a surprise to some people that they need to split a portion of their retirement with an ex-spouse, and they might have to rethink their retirement plans as a result. Furthermore, rules around dividing retirement accounts may be complex. For example, there are steps that must be taken to avoid taxes and penalties on early withdrawals on some types of accounts. Pension plans have individual rules that must be followed. In some cases, it might not be possible to split the account, and other arrangements may be necessary.
People should also consider how divorce might affect their estate planning. It is common for people to forget to revise their beneficiary designations after a divorce, leaving an ex-spouse listed on their retirement accounts and life insurance policy. This can cause issues later since these documents override wills and trusts. Parents may want to consider creating a trust for their children, particularly if they remarry. If they do not and they die first, the new spouse could leave everything to their own children. A trust can help ensure that the children from the first marriage still receive their parent’s assets.
During a divorce, it may be possible for the couple to negotiate an agreement for dividing property instead of having to go to court. This can leave them in control of the outcome and may be less costly. However, people going into negotiations should think ahead of time about what compromises they are willing to make and what they will not compromise on. They should not try to stall the divorce process, but they should make sure that the final agreement gives them the financial security that they need.