You have been putting money towards your retirement, but will a divorce cause all those years of saving to unravel? The answer to this question depends on the nature on the community property estate as a whole. If you and your spouse have fairly equal retirement savings, then it’s most likely that each of you will simply take your respective retirements to simplify the process.

However, if your retirement constitutes a significant portion of the community estate, then your spouse will need to receive funds from another source (perhaps from equity in the marital home) to offset the assignment of the retirement savings.

If the retirement has to be divided between you and your spouse, you will not need to liquidate the other spouse’s share. Instead, a Qualified Domestic Relations Order (QDRO) will accompany your final decree of divorce and instruct the entity managing the retirement regarding the details of the division. Both portions will remain in the possession of the overseeing entity until either of you decides to withdraw your respective funds. In such a situation, the QDRO circumvents the necessity of liquidating a portion of the retirement, and enables you and your spouse to avoid penalties and fees.