You may be tempted to split everything down the middle in a divorce: house payment, furniture, even the money in your bank accounts. But when it comes to splitting your investments, there are many ways you can be led to believe you are getting an even swap, only to be left working for 10 more years because the market went south.

Here are a few things to consider before you agree to keep or trade any investment accounts in divorce court:

  • Your investment returns are not guaranteed. Your spouse may attempt to “play up” the value of a certain stock because it is currently on the rise. However, investments will always carry more risk than liquid assets such as land, houses, or cars, so you should get an unbiased professional opinion on the value of an investment before accepting.
  • Examine your pension benefits. There are two main types of retirement accounts: defined benefit plans (DBP) and defined contribution plans (DCP). The first a monthly pension that your employer pays to you after you retire. The second plan—which includes 401k accounts—bases the amount of your monthly benefits on how much you have contributed to the fund over the years. An accountant can help you determine what each account is worth today, helping you decide on a fair share.
  • Consider how your financial accounts relate to each other. It can be tempting to divide your assets one at a time, but many investment accounts are linked and interact with each other. For instance, each carries tax implications, capital gains, early withdrawal penalties, and other fees that can affect the value of the asset.
  • Think about your life-long financial security. Don’t sign an agreement just to “get it over with.” The decisions you make about your finances now will affect you for the rest of your life, and you will not have another chance to get a fair portion once you sign an agreement.

If you do not fully understand your investment accounts, you should have a CPA or attorney look over the details to make sure you are agreeing to a fair and sustainable amount. Learn more about preparing for a divorce and what you need to know about asset division during divorce.

Molly B. Kenny
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Divorce and Child Custody Attorney Serving Bellevue and Seattle Washington