Try to divide your assets sooner rather than later. It’s comforting to feel in control of your own money at a time when you don't feel in control of anything else. And you can’t really separate while you still own everything together.
Some assets are harder to divide than others. It’s worth paying for legal help to do it right because it can save you huge amounts of money, to say nothing of grief.
- Ask a judge to divide your employer-sponsored retirement accounts. The judge sends a QDRO -- a qualified domestic relations order -- to the 401(k) plan administrator, who splits one account into two. A similar court order can divide IRAs without triggering any taxes. The order goes to both spouses. It tells the one who owns the IRA to give the IRA custodian (the bank or mutual fund that holds it) written instructions to transfer part of the money into a new IRA in the other spouse's name. And it tells the second spouse to set up an IRA to receive the money.
- Think twice about taking the house in exchange for letting your former spouse take the retirement account money. A house costs a lot to maintain and it doesn't generate income. As a rule, you're much better off selling it and splitting the profits than opting to stay in a home you can't afford.
- If you have a jointly-owned business, negotiate a cash buyout.
- Make sure your divorce settlement says how you and your ex will share your child's expenses after he turns 18.
- Talk about how you'll handle this year's tax return. "If you file conflicting tax returns, you're putting a neon sign in front of the IRS," says one divorce lawyer.
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