Do you know how filing for divorce in Wisconsin will affect your finances? How about your retirement savings? Wisconsin law has some specific guidelines and some potentially confusing clauses when it comes to splitting finances and fees during divorce. Preparing for those changes can help you protect your assets.
Wisconsin is a community property state, meaning everything you acquired while you were married could be split 50/50 in the event of a divorce. “Everything” is a broad category, and is generally interpreted to mean the following that was acquired during the marriage:
All income from either spouse: Salary, stock dividends, capital gains, retirement accounts, etc.
All debts from either spouse (typically excluding student debt)
All property (investment and personal)
For instance, if you had a retirement savings account with a significant amount of money in it before you got married, you would be entitled to that amount during the divorce, but the rest may need to be split 50/50. However, if these savings are in a 401(k) provided or backed by an employer, it will add complications to the proceedings.
In order to access the retirement savings, joint or separate, you will need to file a qualified domestic relations order (QDRO). This goes for 401(k) or pensions or other related accounts.
This form is related to your divorce but is a separate legal document to cover each account. Your attorney may provide this service or it may require an additional finance professional who works alongside your attorney.
Your accounts could be transferred as money directly or transferred as a 401(k) to a rollover IRA. Just be sure not to change an account beneficiary until after the divorced is finalized. It may not only be illegal, but you could accidentally lock yourself out of the event if your spouse dies before the divorce is finalized.
401(k) withdrawals for divorce purposes are not usually penalized as other “underage” withdrawals may be penalized. However, ordinary taxes may still apply.
Financial advisors can assist you through every step of this process. Be sure that these steps go along with your divorce proceedings in order to avoid unnecessary fees and delays in your case.