Dividing assets is one of the main challenges when getting divorced. When most couples get married, the possibility of divorce is never planned for. This means that their assets are also handled in a manner that doesn't make the division any easier when they decide to go their separate ways.
In certain cases, there are assets that you may not even know whether or not you're entitled to them. Retirement accounts, for instance, can be a controversial issue. Is a spouse entitled to part of their partner's retirement benefits?
Funds Added During and Before Marriage
Any funds that your spouse adds to their retirement account while they are married to you will be considered marital property. This means that the same rules that apply for other regular marital property will apply when dividing these funds.
Any funds that your spouse added to their account before your marriage will be considered separate from their marital property. This means you won't be entitled to a share of these funds. However, money put into retirement accounts typically increases in value. Any such increase in the value of these funds during your marriage will be considered marital property as well in certain states.
How Are Assets Split?
Unfortunately, how retirement accounts are divided during a divorce is almost always complicated. It's easy for an attorney to mishandle this problem. For example, if the funds are in 401(k) or 403(b), there are federal guidelines on how these funds should be divided. However, if the funds are in an IRA, state laws will apply. Apart from the complications when splitting up the money, further complications are likely to arise with regards to how the money will be transferred.
You may be expecting a lump sum payment from your divorce, as some often do, but many pension plans don't issue lump-sum payments. Instead, you may only start receiving monthly payments once you've attained retirement age. Therefore, if you're counting on the money from a retirement account for immediate expenses, you need to know when and how the money will be transferred.
Complete the QDRO Before the Divorce Is Finalized
A qualified domestic relations order is required when dividing a pension plan. It's what informs the administrator on the amount to be divided and how payments should be made. Work with your divorce attorney to ensure your QDRO is completed before the divorce papers are signed since complications such as rejection of lump sum payments may arise.
For more information, talk to a divorce lawyer in your area.
Share29 May 2019
My name is Laura, and I am an attorney specializing in helping clients leave violent marriages. The law can help victims be safe, but many potential clients cannot afford legal services and may be afraid to pursue divorce. They may not be aware of services that have been created to keep them hidden from violent ex-partners and to help them be awarded assets in a divorce so they can provide for themselves and their families. I hope to raise awareness of these issues as well as help direct people in danger to facilities where they can receive guidance and financial assistance.