Other than your house, the pensions and retirement plans of spouses as well as business(es) owned by one or both of the parties can often be the most values assets of the marriage.
With regard to pensions, such retirement plans are often divided by use of a Qualified Domestic Relations Order (“QDRO”), wherein the spouse that is not officially on the plan receives their community interest in the pension by a rollover IRA which avoids any tax implication to either party. A 401K plan is often divided the same way. Unlike a 401k whose value is whatever the current value in the account is, a pension is worth more in the future but does have a present day value that can be determined by use of an actuary, and such valuation can be considered in the division of all assets and debts in your case.
In addition, the business owed by you or your spouse or both parties is generally going to be considered a community property asset. In a divorce, the spouse that is not the active party in the business is entitled to their one-half interest in the value of that business, but that value must be determined. In order to figure out the value of a business, a forensic valuation of the business needs to be done in order to attach a dollar figure to the value of the business. Therefore, a forensic accountant needs to be hired by one or both of the parties, which will take time to complete and will come at a cost. Once that value is determined, then the parties in the divorce can determine how the other spouse will be paid their share of the business, either from other assets of the marriage, or by a payment plan, or other agreed option. For example, the controlling partner of the business can agree to give up their interest in the equity in the marital residence to offset the other party’s interest in the business.
The bottom line is that pensions and businesses are important assets that must be considered in your divorce case, because they have definite value that you want to receive your share of. Consider the financial issues as part of a business deal that you are negotiating, and educate and empower yourself in the process so that you can control your financial future by protecting your financial interests in your divorce.
Gerald A. Maggio is an experienced Orange County divorce and family law attorney and family law attorney located in Irvine, California, serving the Orange County and Riverside areas. Mr. Maggio assists clients with legal issues including divorce, legal separation, divorce mediation, child custody, prenuptial agreements, stepparent adoptions, and other family law issues. Mr. Maggio has practiced law in California since 1999, and founded The Maggio Law Firm in 2005, focusing exclusively on divorce and family law matters.