At Purposeful Wealth Advisors, we’re often asked some version of this question: “Okay, I know I’m going to receive assets as part of the divorce settlement, but how does the money actually get to me?”
It’s a great question—and one that can feel overwhelming if you haven’t been the one handling the finances in the past. Let’s walk through the basics so you know what to expect and where we come in to make the process smoother.
1. Cash Transfers: Wires to Bank or Investment Accounts
Let’s start with cash. Once your settlement is finalized, any cash that’s part of your agreement is typically sent to you via wire transfer. This can go to a checking account or directly into your new investment account, depending on your financial plan and how the funds are intended to be used.
We’ll help you decide which destination makes the most sense and make sure everything is properly set up in advance, so the funds arrive safely and on time.
2. Investment Assets: Stocks, Bonds, and Mutual Funds
For non-cash investment assets—things like individual stocks, bonds, or mutual funds—these are generally transferred “in-kind” (meaning, not sold first) at the financial institution where the account is currently held.
In most cases, that means you’ll need to open your own account at that same institution. Don’t worry—we handle all of this for our clients, from selecting the right account type to walking you through the paperwork.
Once your portion of the assets is divided, you can then transfer the investments into your long-term investment account that aligns with your new financial strategy.
Important Side Note on Taxes:
When investment assets are divided, the cost basis (a term for what the asset was originally purchased for) also needs to be divided properly. If this isn’t done correctly, it can create unexpected tax consequences down the road when you sell the assets. We pay close attention to these details, so you’re not left with a surprise tax bill later.
3. 401(k)s and Pensions: The QDRO Process
Some retirement assets, like 401(k)s and pensions, require a special legal document called a Qualified Domestic Relations Order (QDRO). These documents are prepared by an attorney and must be approved by the court and the retirement plan administrator.
Because of this legal process, QDRO transfers can take much longer than other types of transfers—sometimes several months. We have a separate blog post dedicated to QDROs, because they really are a category all their own. What Are Qualified Domestic Relations Orders (QRROs) and Why Are They Important?
4. IRAs and Roth IRAs: A Simpler Process
If the retirement account being divided is not part of an employer-sponsored plan (like a traditional IRA or Roth IRA), the transfer process is usually much more straightforward.
These accounts can typically be divided at the institution where they’re currently held, then moved into your new account. If you’re receiving several IRAs, we can often consolidate them into a single IRA to simplify your life and reduce paperwork. However, Roth IRAs must remain separate—that’s a tax rule we have to follow.
5. Don’t Forget About Cash Flow During This Time
One final thing to keep in mind: while these transfers are in progress, it’s important to make sure you have enough accessible cash to pay your bills. Transfer timelines can vary, and we never want you to feel financially stressed during this period. We’ll help you plan in advance so you have the right amount of liquidity in the right places.
You’re Not Meant to Do This Alone
Dividing assets after a divorce isn’t just about moving money from one account to another—it’s about rebuilding your financial life with clarity and confidence. That’s what we’re here to help with, every step of the way.
Need support as you navigate the financial complexities of divorce?
At Purposeful Wealth Advisors, we help women make empowered, meaningful decisions about their money during and after divorce.
Reach out for a complimentary 30-minute consultation today to learn how we can support your journey to a stronger, more confident future.
