Divorce presents significant financial changes, and one of the most pressing questions for many people is what happens to their investment portfolio. If you’ve spent years building retirement accounts, stock portfolios, or other investment assets, the thought of dividing them can be overwhelming.
The answer in Howard County and throughout Maryland depends on several factors, including how and when the assets were acquired. This article covers how investment portfolios are classified in Maryland divorce cases, what factors influence division, steps you can take to protect your assets, and how the expertise of a knowledgeable divorce attorney in Howard County, MD, is invaluable.
How Maryland Classifies Investment Portfolios in Divorce
In Maryland, the division of assets during a divorce operates under an equitable distribution system, determining how investment portfolios are classified. While assets in community property states are divided equally, Maryland courts allocate property as they consider equitable.
Marital property refers to assets gained during marriage, no matter whose name is on them or who paid for them. Even if only your name is listed on an investment account, it could still be classified as marital property if contributions were made throughout the marriage.
However, property acquired before marriage, gifts or inheritances made only to one spouse, and property traceable to these sources are not considered marital property.
What Happens to Retirement Accounts and 401(k)s
Retirement accounts present special considerations in divorce cases. When someone gets divorced, their ex-spouse may become entitled to a portion of their retirement account balance.
To split a 401(k), pension, or employer-sponsored retirement plan, you need a Qualified Domestic Relations Order (QDRO). Most plans require a QDRO before they can pay any portion of retirement benefits to an ex-spouse.
A QDRO is a court-issued document that allows retirement accounts to be split between spouses without penalties or tax issues. The order must specify the parties’ names, addresses, and the portion of the benefits to be distributed.
Individual Retirement Accounts (IRAs) follow different rules and can be divided through a direct transfer authorized by the divorce decree without needing a QDRO.
Protecting Pre-Marital Investment Assets
If you had investment accounts before marriage, these assets may remain separate property. The challenge lies in proving that current account values can be traced back to pre-marital contributions. This becomes complicated when:
- You continued making contributions to the duplicate accounts during your marriage.
- Pre-marital investments generated returns during the marriage.
- Accounts were commingled with marital funds.
Documentation is essential. Bank statements, brokerage account records, and financial documents showing account balances at the time of marriage can help establish what portion should remain separate property.
Factors Howard County Courts Consider
When dividing investment portfolios and other marital property, Maryland courts consider multiple factors to determine equitable distribution. These factors include the duration of the marriage, the financial contributions made by each spouse, the financial situation of both individuals, and how the property was acquired.
Courts also evaluate each spouse’s age, physical and mental condition, earning capacities, and employment opportunities. If one partner gives up career opportunities to support the family, it may influence how assets are divided.
The court also considers non-financial contributions, including responsibilities such as staying home to care for children or overseeing household management.
Steps to Protect Your Investment Portfolio
Taking proactive measures can help protect your investment portfolio during divorce proceedings. Gather complete documentation of all investment accounts, including statements showing balances at the time of marriage, contribution records, and current valuations.
If you possess a prenuptial or postnuptial agreement pertaining to investment accounts, provide your divorce attorney with copies. These agreements can have a considerable effect on how assets are divided.
Refrain from making significant financial decisions or transferring assets during divorce proceedings without seeking legal advice. Transferring funds between accounts can lead to complications and might be perceived negatively by the court.
Consider getting professional valuations for complex investment portfolios, especially those that include stock options, restricted stock units, or business interests.
Working With a Divorce Attorney in Howard County, MD
Successfully protecting your investment portfolio during divorce requires experienced legal representation. A knowledgeable divorce attorney in Howard County, MD, can assess which assets are marital versus separate property, calculate the marriage portion of investment accounts, and negotiate property settlements that protect your financial interests.
Your attorney can also prepare or review QDROs to secure that retirement accounts are divided correctly and advise you on the tax implications of different settlement options.
Protect Your Financial Future With Milstein Siegel
Dividing investment portfolios and retirement accounts is one of the most complex aspects of divorce. Your choices will affect your long-term financial security.
At Milstein Siegel, our experienced family law attorneys have helped numerous clients throughout Maryland protect their financial interests during divorce. We understand Maryland’s equitable distribution laws and have extensive experience handling high-asset divorce cases involving complex investment portfolios.
Contact Milstein Siegel online or call (443) 230-4674 to arrange a consultation and learn how we can assist you in safeguarding your financial future during your divorce in Howard County.