The laws governing how property is divided during divorce vary from state to state. Nevada uses a "community property" system of property division, which means that assets acquired by either spouse during a marriage are generally treated as shared property and will be divided equally upon divorce. Therefore, in Nevada, contributions to your 401(k) account may be split between you and your spouse if you decide to divorce.
One of the best ways to prevent your 401(k) from being divided with an ex is to plan ahead with a prenuptial agreement specifying that your 401(k) will be considered separate property in the event of divorce. However, even without a prenuptial agreement, there are steps you can take to help protect your 401(k).
One option is to negotiate an out-of-court divorce settlement that allows you to retain your entire account, usually in exchange for another asset or lump sum payment. Depending on your specific circumstances, this may be preferable because it allows you to take the financial hit upfront rather than delaying the loss until your retirement years.
Regardless of whether you arrange a buyout or split your 401(k) directly, you can protect your assets by minimizing the portion of the account that your spouse receives. Keeping detailed records of your 401(k) contributions over the years will help you to establish what the value of the account was at the time of your marriage. This may enable you to keep your pre-marital contributions as separate property and divide only what accrued during the marriage. Depending on the duration of your marriage and the timing of your 401(k) contributions, this could make a substantial difference in the property settlement.
Another way to minimize an ex-spouse's share of your 401(k) during divorce, particularly when the divorce process is drawn out over several months or years, is to suspend your contributions to the account as soon as you can legally do so. It is important to seek legal advice before taking this step, however, since in some cases the law prevents divorcing spouses from making major financial changes while a divorce is pending.
To learn more about protecting your assets during a divorce in Nevada, or for help negotiating a property settlement, contact an experienced divorce lawyer in your area.