Your largest asset, especially if you have been together a long time, is likely your 401(k) retirement plan. Protecting your 401(k) is vital to your financial future. 

Your spouse can likely claim at least part of your 401(k) unless you have a prenuptial agreement. In the absence of such an agreement, your retirement account may be subject to division. 

Protection through the courts 

If you and your spouse take your divorce to court, a judge decides how to divide your retirement savings account. The court rules on what qualifies as marital property. Any asset that either of you contributes to, purchases or earns during the marriage is marital property, regardless of which of you acquired it. 

In the case of a 401(k), your spouse likely can stake a claim to part of the money added to the account during your marriage. At the same time, you can file a claim to your spouse’s 401(k). 

Protection through alternative means 

When large assets such as a 401(k) are up for grabs, the stakes are high and call for a sound strategy on your part. One option is negotiating with your spouse over your 401(k). You and your spouse may negotiate an asset exchange that leaves your retirement account intact and prevents you from losing your future security. For example, you may agree to give up the house in exchange for keeping your account intact. 

The negotiation process has the advantages of being less stressful, quicker and less costly. Also, proceedings are not open to the public. If you reach an agreement, a judge will likely approve the deal. 

Avoiding court also gives you more control because the legal process does not bind you to the rules of division. You are, for all intents and purposes, making up your own rules. You are less likely to encounter any legal “surprises” along the way.