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Five Ways Tennessee Residents Can Protect Retirement During Divorce

The deeply emotional nature of a divorce can make it difficult for Tennessee couples to keep a clear head and eye on all of the things that need to be accounted for or divided without making errors that leave one in an unnecessary bad situation.

Whether retirement is decades or only years away when you are divorcing, there are some common pitfalls people may fall into that are easily avoidable and can help save you valuable money for your retirement years. Following are five ways you can help to make the most out of your divorce asset division for your current and long-term financial benefit.

Choose carefully whether or not to keep your home

Many people commonly believe that keeping the marital home is always a good idea. Certainly there are many aspects to such a decision, including emotional and sentimental ones or maintaining stability for children. However, if you are considering the topic from a purely financial perspective, looking at your house as a retirement investment may not be the wisest choice you could make.

Even if the current day value of your home is the same as the current day value of your retirement fund, you must remember that there are ongoing expenses associated with owning a home that are not associated with investment accounts.

Exercise caution when processing funds transfers

The windows in which you are legally allowed to transfer money from pensions or retirement accounts during a divorce proceeding is very specific if you wish to avoid penalties and taxes. Making your transfer at the wrong time could result in you losing a portion of your investment unnecessarily.

Consider a QDRO

A Qualified Domestic Relations Order is only required for select types of assets in a divorce and is an important way to protect those assets from penalties and taxes. Essentially a QDRO ensures that all entities view the transaction clearly as part of the divorce instead of an early distribution, allowing you to maintain the maximum value possible.

Avoid taking money out of accounts too soon

Even if you are legally able to pull some money from your retirement funds during a divorce, be careful. Doing so could have long-term consequences and lose you more money than you realize for years when you truly need it more than you do now.

Rely on professionals

Because there are so many nuances involved in financial divorce decisions and the laws surrounding them, it is always advisable to work with a competent and experienced attorney. Ensuring your financial stability now and down the road can be hard to do in the middle of an emotional trauma and a good lawyer can help you make the best choices for you.