Property division negotiations between Kentucky couples who are getting a divorce may hold some financial pitfalls. For example, a couple may decide that one will take a 401(k) while the other will take a brokerage or checking account that has the same value. However, the person who takes the brokerage or checking account has a much more liquid asset than the person with the 401(k) because of penalties associated with withdrawals from the retirement account.
A couple may decide to split the 401(k) as a fairer arrangement, but they will need a qualified domestic relations order to do this without incurring any penalties. Once a person receives a distribution from the 401(k), it is necessary to roll it into an individual retirement account within a 60-day period.
Another error may be keeping the home instead of a more liquid asset. As with the retirement account, the home may look like an asset of equal value, but the upkeep can be costly. In some cases, it might be more than a person can afford on a single income. In general, it is important to include the cost of tax and maintenance in the worth of any asset. Finally, a person who is getting child support or alimony should consider taking out a life insurance policy on the payer.
Finances can present a challenge during a divorce. Some people may not have worked outside the home or handled the family finances much. Others may be concerned about how much child support and alimony they will have to pay. Standards of living may drop after a divorce. However, making wise decisions when negotiating property division can help a person become more financially stable after the divorce. An attorney can often assist a client in planning how property division might proceed.