Texas couples looking to divorce likely have several questions in mind. Some of them may revolve around finances, as untangling one person’s finances from another post-divorce can be tricky and complicated. For example, what happens to a 401k? Can it be protected, and if not, what happens to it?
According to the Huffington Post, the easiest way to protect a 401k is through a prenuptial agreement. This is essentially a contract written out between two people before they become married. Within the contract, the division of property, finances and so on is determined. While some people may frown upon this as a “bad omen” or believe it to be unnecessary, it’s actually a logical decision and can help a person out in the future if they find their marriage isn’t working. With prenuptials made in a calm, clear state of mind and emotion, 401k protection can be handled fairly and quickly.
Research 401k.com states that if a person doesn’t decide things in a prenuptial agreement, a share of the 401k will be available to both their ex-spouse and any dependents. Things such as who gets how much money, how the retirement assets will be divided, and when the payments need to be made will be decided in the court.
Dealing with financial divides after a divorce are complicated enough to warrant at least a consideration of prenuptial agreements. However, if a person did not craft one, they will simply have to be prepared for the possibility that their 401k will be divided amongst their ex-spouse and children.