Withdrawing money from 401K/retirement account before divorce-- implications?

[Anonymous]

Divorce Scenario with only one asset, as follows :

Spouse who wants out of marriage has almost never worked and comes from a very wealthy non-US family; all of his familial assets are hard to trace but could be proved because of the lavish lifestyle.

The other spouse who works has the 401K account is not wealthy works and finds it unfair that wealthy spouse wants half of the marital property.

What is the worst case scenario for the spouse who decides to empty the 401k/retirment account and stops working after?

[Anonymous]

Anonymous wrote:Divorce Scenario with only one asset, as follows :

Spouse who wants out of marriage has almost never worked and comes from a very wealthy non-US family; all of his familial assets are hard to trace but could be proved because of the lavish lifestyle.

The other spouse who works has the 401K account is not wealthy works and finds it unfair that wealthy spouse wants half of the marital property.

What is the worst case scenario for the spouse who decides to empty the 401k/retirment account and stops working after?

You can empty it but it will be added to your income along with a 10% penalty. You will lose quite a bit unless you do stop working so your income goes down.

[Anonymous]

Coming from a wealthy family doesn't mean anything unless assets are in his name. My ex was a trust fund kid who couldn't earn a buck if her life depended on it. She still fought tooth and nail to get half of every last cent - and she was successful.

To the extent that your 401k was funded during the marriage, your ex is going to get half. You aren't likely to get away with hiding it.

[Anonymous]

Anonymous wrote:Coming from a wealthy family doesn't mean anything unless assets are in his name. My ex was a trust fund kid who couldn't earn a buck if her life depended on it. She still fought tooth and nail to get half of every last cent - and she was successful.

To the extent that your 401k was funded during the marriage, your ex is going to get half. You aren't likely to get away with hiding it.

That is not the case here. My soon to be ex gets handsome allowance and all his lavish expenses covered by his family.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Coming from a wealthy family doesn't mean anything unless assets are in his name. My ex was a trust fund kid who couldn't earn a buck if her life depended on it. She still fought tooth and nail to get half of every last cent - and she was successful.

To the extent that your 401k was funded during the marriage, your ex is going to get half. You aren't likely to get away with hiding it.

That is not the case here. My soon to be ex gets handsome allowance and all his lavish expenses covered by his family.

It doesn’t matter. He is still entitled to half of assets acquired during the marriage. You’re not going to be able to hide it and get away with it regardless of what his parents cover. That is not earned income or assets.

[Anonymous]

He will get 1/2. Simple as that.

[Anonymous]

OP here, so what will happen with the money that has been withdrawn and cannot be traced to a bank account?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Coming from a wealthy family doesn't mean anything unless assets are in his name. My ex was a trust fund kid who couldn't earn a buck if her life depended on it. She still fought tooth and nail to get half of every last cent - and she was successful.

To the extent that your 401k was funded during the marriage, your ex is going to get half. You aren't likely to get away with hiding it.

That is not the case here. My soon to be ex gets handsome allowance and all his lavish expenses covered by his family.

Allowances are merely gifts. He either has a legal right to the income/assets or he doesn’t.

[Anonymous]

Anonymous wrote:OP here, so what will happen with the money that has been withdrawn and cannot be traced to a bank account?

There’s a record the money was in the account. You will still be responsible for paying the spouse half. Doesn’t matter if you’ve hidden it. You’ll have to pony it up. Also, to empty the account your spouse will have to agree to it. That’s the tricky thing with 401ks, the law recognizes the spouse’s rights.

[Anonymous]

Anonymous wrote:OP here, so what will happen with the money that has been withdrawn and cannot be traced to a bank account?

The court doesn’t care where it is. The withdrawal is recorded so the spouse who withdrew it will have it counted as an asset in the division, assuming that it was withdrawn in the recent past. The court isn’t going to look back 5 years, but it will care about recent transactions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here, so what will happen with the money that has been withdrawn and cannot be traced to a bank account?

The court doesn’t care where it is. The withdrawal is recorded so the spouse who withdrew it will have it counted as an asset in the division, assuming that it was withdrawn in the recent past. The court isn’t going to look back 5 years, but it will care about recent transactions.

If the spouse without the account tells their lawyer about this, they absolutely will look into where the money is. And any good lawyer is going to ask their client about all marital assets, including 401ks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here, so what will happen with the money that has been withdrawn and cannot be traced to a bank account?

The court doesn’t care where it is. The withdrawal is recorded so the spouse who withdrew it will have it counted as an asset in the division, assuming that it was withdrawn in the recent past. The court isn’t going to look back 5 years, but it will care about recent transactions.

If the spouse without the account tells their lawyer about this, they absolutely will look into where the money is. And any good lawyer is going to ask their client about all marital assets, including 401ks.

But, a transaction from 5 years ago is much easier to say that the spouses agreed to use the money for X or Y and it no longer exists in the estate. It would be hard for the other spouse to prove theft if they haven’t made some kind of enquiry about the money in all that time. A withdrawal now will be assumed to be a solo move that the other spouse can protest.

[Anonymous]

What if money is needed for the divorce or medical expenses?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here, so what will happen with the money that has been withdrawn and cannot be traced to a bank account?

The court doesn’t care where it is. The withdrawal is recorded so the spouse who withdrew it will have it counted as an asset in the division, assuming that it was withdrawn in the recent past. The court isn’t going to look back 5 years, but it will care about recent transactions.

If the spouse without the account tells their lawyer about this, they absolutely will look into where the money is. And any good lawyer is going to ask their client about all marital assets, including 401ks.

But, a transaction from 5 years ago is much easier to say that the spouses agreed to use the money for X or Y and it no longer exists in the estate. It would be hard for the other spouse to prove theft if they haven’t made some kind of enquiry about the money in all that time. A withdrawal now will be assumed to be a solo move that the other spouse can protest.

No it wouldn’t. It would be very easier for the attorneys to request an accounting of where the money went. That’s what forensic accountants do in divorce cases. Don’t underestimate the spouse with a wealthy family. They will our lawyer you.

[Anonymous]

Anonymous wrote:What if money is needed for the divorce or medical expenses?

Both spouses have to sign for the withdrawal. If it’s used for the divorce, again only 50% of what was earned during the marriage can be used as the other 50% belongs to the other spouse.