What Happens to Retirement Accounts Upon Death or Divorce?

what-happens-to-retirement-accounts-upon-death-or-divorceNo one likes to think about things like divorce or death; however, these issues are a part of life that must be addressed at some point. Part of a smart financial strategy is understanding what will happen to your retirement accounts if you divorce your spouse, or when you pass away. This information helps not only protect your retirement money but also your loved ones.

If You Get a Divorce

In the event of divorce, what happens to your retirement account depends on what kind of benefits you have and whether or not you reside in a community property state. If you do live in a community property state, it is more than likely that the majority of your retirement investments will need to be divided in a divorce. Types of retirement accounts that will need to be split and shared include IRAs, 401(k) accounts, Employee Stock Options Plan, and other accrued retirement accounts.

There are a few types of accounts that, even in a community property state, do not need to be split and shared. They include Social Security benefits, Worker’s Compensation benefits, and compensation paid for injuries sustained during military service. If you have any of these types of assets, you retain full ownership of them in the event of a divorce and do not need to give any portion to your spouse.

When retirement accounts are divided in a divorce, one spouse can either buy out the other or the one account can be divided into two accounts. Before making a decision on this issue, it’s a good idea to consult with a financial professional and your attorney. Professional legal and financial guidance can more visibly present the pros and cons of both decisions and help you choose the one that’s right for your unique situation.

Upon Your Passing

Many investors want to feel secure in the knowledge that when they die, their family will be financially cared for. Some benefits, such as pensions and even Social Security benefits, decrease or stop following the death of the account holder. Others, such as IRAs and 401(k) accounts can be passed on to the beneficiary of your choosing.

One type of retirement account that can benefit your beneficiaries after your passing is a Gold-backed IRA. Gold is a smart investment for many reasons. This precious metal has a history of gaining value over the years, and there’s no reason to believe that gold won’t continue to rise in price. It is also incredibly versatile and utilitarian in nature, which means that it sees use across a variety of industries – adding to the sense of intrinsic value.

Protect Your Family with a Gold IRA

Many investors worry about how their passing will financially affect their loved ones. The best way to feel at ease about this issue is to choose a retirement investment that’s likely to rise in value, and one that can hold up against economic collapse. Gold is such an investment; even if the fiat currencies of the world — including those in the United States — collapsed, gold would remain valuable. A Gold IRA lets you save tax-deferred money for your retirement, and upon your death, the account can be passed to and used by the beneficiary of your choosing.

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.