Divorce and 401k

[adamadam]

What is the name of your state (only U.S. law)? IL

My sister's husband some time back was planning to leave her. in doing so, he withdrew half of the 401k prior to this. The 401k in question had his name on it, but exists entirely during their time being married, as in.. none of it predated the marriage. My understanding, and from my own experience, this means it's equally hers and he needs a signature from her to make a withdrawal. This never happened, she never signed anything.

Now, they are going through a divorce, or soon will. I have advised her, of course to get a lawyer. But in the mean time contact the Financial Institution the 401k was with, and request a copy of the signature page, sent to her work not her home. Also let them no the signature was fraudulent. Let him get indicted or whatever, then use that for filing for divorce.

But the question boils down... Half of it is hers, and he withdrew 50% several months ago without her knowledge or permission. Now, there's a divorce brewing. Was this even legal?

 

[mistoffolees]

What is the name of your state (only U.S. law)? IL

My sister's husband some time back was planning to leave her. in doing so, he withdrew half of the 401k prior to this. The 401k in question had his name on it, but exists entirely during their time being married, as in.. none of it predated the marriage. My understanding, and from my own experience, this means it's equally hers and he needs a signature from her to make a withdrawal. This never happened, she never signed anything.

Now, they are going through a divorce, or soon will. I have advised her, of course to get a lawyer. But in the mean time contact the Financial Institution the 401k was with, and request a copy of the signature page, sent to her work not her home. Also let them no the signature was fraudulent. Let him get indicted or whatever, then use that for filing for divorce.

But the question boils down... Half of it is hers, and he withdrew 50% several months ago without her knowledge or permission. Now, there's a divorce brewing. Was this even legal?

Clearly, if he forged her signature, that is illegal.

Hypothetically, if he had permission to withdraw the money OR if the money came from a non-retirement account in his name, then there would be nothing illegal about withdrawing the money. Married couples have a great deal of discretion in what they can do with marital assets. The crime here is not his withdrawal of the money, but doing so fraudulently (assuming that she really didn't sign the paperwork - many people sign things and forget them).

You haven't addressed one big issue, though. What did he do with the money? If he opened another account and put the money into that account, it would be at least partially marital and subject to division (the amount would depend on how much the 401K grew during their marriage and whether he made contributions during the marriage). If he bought something, that would be a marital asset, as well.

 

[wolfthing2000]

I believe it depends on the way the plan is set up. Mine allows 5 grand only to be withdrawn without spousal consent. He may have commited fraud**************.....it depends on the plan administrator. I believe mine requires the signiatures to be witnessed if I recal.
I do know that here in Oregon, when a divorce is filed, that both partys are restrained from liquidation of assets or changing insurances etc until final decree. However, if he did it legaly before divorce filing he might be in the clear.
This needs the attention of a lawyer. Then for certain the 401k will get slammed due to costs of attorneys fees******************************************..that's where about all of mine will go after she gets her 1/2

 

[adamadam]

No, she never signed anything. As I told her, obtain a copy of the signature page from the financial organization. But yes, it was an actual 401k. He DID open a new account, his intent was leaving her. But other family members meddled and brought him back (irrelevant).

I told her that during the Discovery Period he has to disclose all of this anyways. And regardless of what he DID with that money, if it was withdrawn fraudulently that in itself is a crime (felony, right?), which could help child custody side of things.

There are other things going on, but I'm advising her to stick with facts, backed up by firm paper trails. And if he is indicted on fraud might make gaining full custody a little easier.

Another thing. She's gaining access to her e-mail accounts utilizing keyloggers. As an IT Security professional, this is a dumb thing to do as far as I'm concerned. That means all of her e-mails with a lawyer could be compromised, or if she accesses work related e-mail from home this could also cause problems. I'm having her follow procedures to remove this software, but...

What is Illinois' take on this? Computer is one thing, but gmail is a remote server, and the account is for her, not him. Just like his accounts aren't accesseble to her. And yes, it's easy enough to document all of this too.

Glad my divorce wasn't this stupid.

 

[mistoffolees]

No, she never signed anything. As I told her, obtain a copy of the signature page from the financial organization. But yes, it was an actual 401k. He DID open a new account, his intent was leaving her. But other family members meddled and brought him back (irrelevant).

I told her that during the Discovery Period he has to disclose all of this anyways. And regardless of what he DID with that money, if it was withdrawn fraudulently that in itself is a crime (felony, right?), which could help child custody side of things.

There are other things going on, but I'm advising her to stick with facts, backed up by firm paper trails. And if he is indicted on fraud might make gaining full custody a little easier.

Another thing. She's gaining access to her e-mail accounts utilizing keyloggers. As an IT Security professional, this is a dumb thing to do as far as I'm concerned. That means all of her e-mails with a lawyer could be compromised, or if she accesses work related e-mail from home this could also cause problems. I'm having her follow procedures to remove this software, but...

What is Illinois' take on this? Computer is one thing, but gmail is a remote server, and the account is for her, not him. Just like his accounts aren't accesseble to her. And yes, it's easy enough to document all of this too.

Glad my divorce wasn't this stupid.

I think you're mostly on the right track. If he took the money out of one account and stashed it in another, both accounts will be discoverable and divisible. If he transferred the money directly into the 401K, there's no tax issue, but if he made a taxable withdrawal in order to put the money into a different account, then her attorney will probably argue that he should bear the tax cost, not her - since it was a clear attempt to hide assets. But you're right that a good accounting will prevent this from directly impacting her.

You can't be so sure that she didn't sign anything. Some people sign documents without knowing - or they forget. You can't say with certainty that she didn't sign something. IF she didn't, then there is a fraud issue, but I'm not sure it will have any bearing on the divorce or even custody. Typically, custody decisions are based on what's best for the kids and it's not clear that a person who commits financial fraud is a bad parent in any way. I'm skeptical that it would have much direct impact.

Your sentence about the keyloggers isn't clear - who is using keyloggers on whom? In any event, it's generally a bad idea and can come back to bite you. In some cases, it could lead to criminal charges. And there's really not much reason for it - she will be able to subpoena all of his records, anyway, and it will be clear if there are major withdrawals. If it were me, I'd thoroughly clean the computer (possibly even reformatting the drive and reinstalling the software) and install a strong admin password as well as a BIOS password. It would be even better if she can arrange it so he doesn't have physical access to the computer, but that may not be possible.

 

[wolfthing2000]

Forget anything to do with a computer if you want to have it private or secure. I got talked into bill pay by a bank manager. I had an insurance cancel me and almost couldn't get it re-instated. The whole computer game of "convenience through on line this and that" is trouble.

Communicate by paper with attorneys.

 

[mistoffolees]

Forget anything to do with a computer if you want to have it private or secure. I got talked into bill pay by a bank manager. I had an insurance cancel me and almost couldn't get it re-instated. The whole computer game of "convenience through on line this and that" is trouble.

Communicate by paper with attorneys.

Properly set up, computers can be plenty secure.

 

[wolfthing2000]

Probably can be****************************...but not for me.

 

[adamadam]

He might be using a keylogger on the family computer. I'm advising her to NOT access an e-mail account she might be discussing anything about divorce,or with her lawyers while she is at home. Instead, use a work computer (she can access gmail, it's not prohibited). I don't have physical access to the computer to check myself. Dealing with non techie types.

I also suggested she look at ALL bank/credit card records she has access to. He has this habit of spending the family's money. His car has a working heater, her's doesn't. She transports their son, he refuses to. They don't have enough money to get her heater fixed, but he can spend money. I mentioned if she can, just use e-mail as a communications method (they don't speak much, it's that bad), but to do a BCC to a 3rd party e-mail, like her official work e-mail, or something along those lines.. depends on the willingness of the IT staff. At least she can show PROOF she brought up that she needs to fix the heat in THEIR child's transportation in the winter, while he's off buying stuff.

You're correct... having a few dings.. like "fraud" might not say you're a bad parent, but.. if you committed fraud, blew the money while your kid goes without... sorry, but freezing weather requires heat. I DID tell my sister she needs to understand that there is NO "His Car" and "Her Car"... since both were purchased during marriage.

I also understand what you mean about her maybe signing it without knowing it. Always a possibility, but that's why she needs to see the signature page. And get details on withdrawals allowed without spouse signatures.