Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Divorce & Retirement Accounts Question
Old 10-10-2017, 04:35 PM   #1
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 90
Divorce & Retirement Accounts Question

I formed my business before getting married. I am setup as an LLC taxed as an S corp. I own 100% of the business.

Most of my retirement is in my solo401k which is setup under my business and has annual employer contributions.

I also have a Roth IRA.

My question is... if my wife and I were to get divorced, would she get half of my roth ira only? I've heard that because the business was formed before we were married, she shouldn't have access to the solo401k. We are in Texas.

I appreciate the replies.
dsp0725 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-10-2017, 04:43 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
Based on my observations.... she'll likely get 1/2 of the growth all accounts from when you got married to when you get divorced... Roth, solo 401k and any others... plus 1/2 of the increase in the value of the business. And vice versa... you'll get half of her growth.

If she has a good divorce attorney or you have been a bad actor then she might get more.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 10-10-2017, 04:45 PM   #3
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,545
Quote:
Originally Posted by dsp0725 View Post
I formed my business before getting married. I am setup as an LLC taxed as an S corp. I own 100% of the business.

Most of my retirement is in my solo401k which is setup under my business and has annual employer contributions.

I also have a Roth IRA.

My question is... if my wife and I were to get divorced, would she get half of my roth ira only? I've heard that because the business was formed before we were married, she shouldn't have access to the solo401k. We are in Texas.

I appreciate the replies.
Not sure that is correct. Whatever was in the account prior to marriage would be yours. Additions and any appreciation that happened after the marriage would be marital assets. At least that's what happened in my divorce.

I kept 100% of the 401k by trading other assets for it. Keep in mind that if you are trading after tax assets for 401k value you need to determine what the after tax value of the 401k is (you haven't paid taxes on 401k yet) or you will come out on the short end.
__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is offline   Reply With Quote
Old 10-10-2017, 09:29 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 6,002
Kind of reminds me of that Jerry Reed hit, "She Got The Gold Mine (I Got The Shaft) where they split it down the middle and she got the better half.
Bamaman is offline   Reply With Quote
Old 10-10-2017, 09:32 PM   #5
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,593
One thing to keep in mind: "Community property" does not equal a 50/50 split.
__________________
*********Go Astros!*********
aja8888 is offline   Reply With Quote
Old 10-10-2017, 11:17 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,194
This reminds me of a class that I had maybe 35 or so years ago....

You go into a marriage with a cow and bull... that is separate property... after marriage then have a calf... the calf is community property even though it was 'made' from separate property....
Texas Proud is offline   Reply With Quote
Old 10-11-2017, 05:00 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Dec 2015
Posts: 2,232
Quote:
Originally Posted by dsp0725 View Post
I formed my business before getting married. I am setup as an LLC taxed as an S corp. I own 100% of the business.

Most of my retirement is in my solo401k which is setup under my business and has annual employer contributions.

I also have a Roth IRA.

My question is... if my wife and I were to get divorced, would she get half of my roth ira only? I've heard that because the business was formed before we were married, she shouldn't have access to the solo401k. We are in Texas.

I appreciate the replies.

if you are even thinking that a divorce may be in the offing, I hope you are seeking the advice of a licensed attorney who handles divorces in your state.
HadEnuff is offline   Reply With Quote
Old 10-11-2017, 06:51 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
athena53's Avatar
 
Join Date: May 2014
Posts: 7,306
I'd like to add, even tough I am NOT a lawyer and my experience is based on a divorce in NJ 20 years ago, that a negotiated property settlement can keep it out of the courts (other than bringing it before a judge for final approval) and give you more leeway. I was able to keep all of the investments in my name, some of which I'd made during the marriage, in return for not getting child support. (My Ex had no assets other than his share of the equity in the house; he'd spent every dime he'd made on nice things for himself and had been unemployed the last 5 years of the marriage.)

The proposed settlement has to be reasonable and signed off by both parties, so the court will look at how your wife will be after this- are there minor children? does she have a career so she can support herself? did she give up a career to hold down the fort at home so you could build the business?

I agree with HadEnuff- talk to a lawyer if you think divorce is a possibility. He/she can tell you how things work in real life in your state.
athena53 is offline   Reply With Quote
Old 10-11-2017, 07:13 AM   #9
Thinks s/he gets paid by the post
candrew's Avatar
 
Join Date: Oct 2013
Location: Cholula
Posts: 1,595
I'm following this thread with interest as my SIL is in the process of dissolving her 25 year marriage. Currently, she and her ne'er-do-well husband are legally separated, their home has been sold and the proceeds from the sale have been split equally.

It should be interesting to see if SIL's soon to be ex will end up with part of her retirement accounts. I'm not aware of how this stuff works. They do live in a community property state. SIL has told other family members that she doesn't need an attorney as her bum of a husband would not try and take her to the cleaners.
candrew is offline   Reply With Quote
Old 10-11-2017, 08:15 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 12,566
1) Consult an attorney in your state. When it comes to legal matters, I've discovered, we may as well be living in 50 different countries.

2) In the mid-00's, a friend separated from and divorced his wife of 15 years who'd been cheating on him (he hired a PI, who got photos and other proof). They had 2 minor children at the time. Even though he was the wronged party, he had to give her half his TSP balance, which was much bigger than hers, since he was older and a higher grade. (He felt he'd come out OK, though, since after the economy recovered, his remaining 1/2 also recovered to more than he'd started with).
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
Amethyst is offline   Reply With Quote
Old 10-11-2017, 08:27 AM   #11
Thinks s/he gets paid by the post
Rianne's Avatar
 
Join Date: Aug 2017
Location: Champaign
Posts: 4,677
A friend of ours just had her divorce finalized. Turned out nasty DH already put many assets in chirpy name without her knowledge. Alert to spouses, be aware and actively involved in all assets, where they are, who's name they are in and where the money goes at all times. Our friend left all finances up to her DH to take care of. She rarely paid a bill or knew account balances. She lived a privileged life of travel and extravagant things for almost 35 years. The shock of what she is facing now, well you can imagine. I told her to read "Millionaire Next Door" to re evaluate her life and spending.
__________________
"Do not go where the path may lead, go instead where there is no path and leave a trail."

Ralph Waldo Emerson
Rianne is offline   Reply With Quote
Old 10-11-2017, 10:29 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
What is "chirpy name"? Odd term.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 10-11-2017, 10:34 AM   #13
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,518
Quote:
Originally Posted by pb4uski View Post
What is "chirpy name"? Odd term.
Uh, I don't think it was an endearing reference ..
MichaelB is offline   Reply With Quote
Old 10-11-2017, 11:24 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Jun 2014
Posts: 1,188
Yes definitely see an attorney. My dads business partner divorced and he was able to exclude his LLC that he formed prior to their marriage but not the business from the family trust fund.

I also know they ended up changing the settlement after several appeals and reinterpretation of the laws defining marital property (as I saw part of his divorce is shown in case law studies).

He didn't have a 401k but there was a lot of discussion over whether the art purchased from business earnings and placed in the family home office was "marital" or not.
karen1972 is offline   Reply With Quote
Old 10-11-2017, 11:32 AM   #15
Thinks s/he gets paid by the post
Rianne's Avatar
 
Join Date: Aug 2017
Location: Champaign
Posts: 4,677
Quote:
Originally Posted by pb4uski View Post
What is "chirpy name"? Odd term.
Chirpy is the gal on the side who managed to get my friend's husband to buy property and such in her name. I think she's from Romania.
__________________
"Do not go where the path may lead, go instead where there is no path and leave a trail."

Ralph Waldo Emerson
Rianne is offline   Reply With Quote
Old 10-14-2017, 12:23 PM   #16
Full time employment: Posting here.
 
Join Date: May 2013
Posts: 609
I got divorced three years ago and have been consulted recently on three other couples’ divorces. In each case the final agreement was negotiated (not court ordered) and more or less coincided with most people’s’ implicit view of “fair.” That said keep your head in the game. Divorce is possibly the most expensive thing a person ever does, and it’s easy to get emotionally side tracked by ex’s manipulation, hourly lawyers promising impossibly good settlements, guilt, desire for freedom, etc. my suggestion is to try to sit down cordially with soon to be ex, lay out the assets, and ask, “what do you think is fair.” If the answer is anywhere in the ballpark of what you think is fair, try to just get it done before the lawyers get into your ex’s head.
__________________
Saved 8 figures by my mid-40's as a professional bubble-spotter. Beware...the Fed creates bubble after bubble after bubble.
RenoJay is offline   Reply With Quote
Old 10-14-2017, 12:53 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,134
Quote:
Originally Posted by RenoJay View Post
my suggestion is to try to sit down cordially with soon to be ex, lay out the assets, and ask, “what do you think is fair.” If the answer is anywhere in the ballpark of what you think is fair, try to just get it done before the lawyers get into your ex’s head.
Agreed. As far as possible keep the 'black robes' away from a divorce settlement.
__________________
Comparison is the thief of joy

The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 10-15-2017, 02:19 PM   #18
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 770
Quote:
Originally Posted by RenoJay View Post
my suggestion is to try to sit down cordially with soon to be ex, lay out the assets, and ask, “what do you think is fair.” If the answer is anywhere in the ballpark of what you think is fair, try to just get it done before the lawyers get into your ex’s head.
+1000!

Of course, this approach requires that the soon to be ex has a rational mind and isn't intent on making you "lose/suffer" no matter what it takes. Unfortunately, that was the mindset my ex had so the lawyers all got to add to their retirement funds.
Carpediem is offline   Reply With Quote
Old 10-16-2017, 11:03 AM   #19
Recycles dryer sheets
 
Join Date: May 2013
Location: Laveen
Posts: 61
ink just dried on mine in august
everything owned/earned prior to marriage stayed that way.Everything owned/earned during marriage was split 50/50
Represented myself, however i had legal counsel guiding me on the sidelines.
As stated every state is different
Every spouse is different
At least consult counsel
mtheulen is offline   Reply With Quote
Old 10-19-2017, 02:03 PM   #20
Full time employment: Posting here.
 
Join Date: May 2013
Posts: 609
Quote:
Originally Posted by mtheulen View Post
ink just dried on mine in august

everything owned/earned prior to marriage stayed that way.Everything owned/earned during marriage was split 50/50

Represented myself, however i had legal counsel guiding me on the sidelines.

As stated every state is different

Every spouse is different

At least consult counsel


Congrats on getting to the other side. Regarding everything earned prior to marriage, did you keep all the earnings, dividends, interest, rent etc on those assets even if the earnings came during the marriage?
__________________
Saved 8 figures by my mid-40's as a professional bubble-spotter. Beware...the Fed creates bubble after bubble after bubble.
RenoJay is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Noticed more people holding signs "need work or food" rayinpenn Other topics 3 05-03-2015 02:51 PM
divorce question ER_Hopeful Other topics 9 12-27-2014 04:05 PM
Divorce & 401k Split/Distribution wildcat FIRE and Money 5 08-08-2009 12:00 PM
Question about divorce and mortgage. dumpster56 FIRE and Money 10 06-19-2007 08:43 AM

» Quick Links

 
All times are GMT -6. The time now is 11:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.