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Can I Empty My 401(k) to Protect It During Divorce?

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Upset Couple 2 20150917 193252 1If you have a substantial amount of money in a retirement account, it is natural to want to protect it in the event of a divorce. You might consider draining your account in order to keep it for yourself, but this is a bad idea that will almost always backfire. Here’s why.

In Colorado, property is divided equitably upon divorce. This is to ensure that neither party is left out in the cold financially. And when divorce is filed for, or when you are served divorce papers, there is an automatic injunction put into place that prevents you from taking drastic actions such as draining your accounts to hide assets. Hidden assets are a big no-no in divorce, because there is almost always a paper trail, and your spouse’s attorney is going to find it. This could have a negative impact on your eventual outcome in your property settlement.

What if My Divorce Hasn’t Been Filed Yet?

Even then, you still should not pull out your retirement funds. If you are entertaining the idea of hiding assets, chances are your spouse would probably not consent to you pulling out your retirement assets. Without your spouse’s consent, the courts could still decide to award your spouse part of your 401(k). This is because of something called dissipation when one spouse wrongfully drains an asset in anticipation of an upcoming divorce. Dissipation is usually the result of intentional misconduct. Dissipation can also be done through what is called “marital waste,” where the value of an asset is reduced or destroyed in an attempt to keep it away from one spouse.

Contact a Divorce Attorney in Lakewood Today

The bottom line is that hidden assets are bad news, and can almost always be found by your spouse’s attorney or the court. If you have concerns about your retirement account and what will happen to it in divorce, instead of taking drastic action, you should speak to a divorce attorney.