If you want to protect your retirement funds during your marriage, it’s not difficult to do but you have to be proactive. The average cost of divorce is astronomical and it doesn’t even include what you lose when you split up your IRAs and 401ks. That’s why it’s so important to take these steps.
In the State of New York, at least, the court ruled that a properly written prenup is valid even if the federal Employee Retirement Income Security Act (ERISA) says it may not be.
This is important for two reasons:
a. Retirement accounts might be the biggest asset you have.
b. Your chances of going through a divorce are 50-50 these days.
That means it really makes sense to do whatever you can to protect these assets from your spouse or other creditors. First, make sure you and your spouse sign a prenup. This should be done at least a month before the wedding. This way, it’s less likely to be viewed as coerced. Also, your spouse must sign a waiver that disclaims any rights to the retirement money.
The trick is to have the spouse do this a week or so after the wedding. Under ERISA, only a spouse can waive the benefits to a qualified retirement plan. If you rely only on the prenup, you are going to be sadly disappointed.
You can either use attorneys to draft these documents or use a service like LegalZoom.
If you were going to get married next month, would you ask your future spouse to sign a prenup and then a disclaimer? Why or why not?