When couples enter the divorce process, they become consumed with dividing their property. This involves deciding who will get the house, cars, personal belongings, and cash. Division of property extends to pensions and retirement accounts held by both parties. Dividing these assets can be a complex process so obtaining assistance from a financial advisor and an expert lawyer for marital property division is recommended–and lawyers provide free consultations to discuss these issues in depth.
Division of Retirement Property During Divorce
Retirement savings can represent a large portion of the assets accumulated during a marriage. Pensions, 401(k) plans, and other retirement accounts provide people with financial security once they stop working. The fact that they affect the future of a divorcing couple makes their division very important. If the parties do not agree on a method for splitting retirement assets, a judge will and in this situation, legal representation is highly recommended. Speaking with a skilled attorney that deals with division of retirement assets is essential to protecting your rights.
Retirement accounts accumulated during a marriage are usually considered marital property. Even if only one spouse contributed to or received money to fund these accounts, the balances may be split, with each party receiving 50 percent. In the case of pensions and some other retirement plans, a qualified domestic relations order, or QDRO, may be required. This court order informs retirement account administrators of how benefits should be paid to the non-employee spouse following a divorce. With a QDRO in place, tax penalties of fund withdrawal and separation are reduced.
Some states have laws regarding pension division and the required calculations can be very complicated. Divorcing couples may be allowed to negotiate which division method to use and this may result in distribution being delayed until the pension matures. Some states permit delay of both division and the percentage determination until pension maturity. Couples can protect their legal rights by getting advice from a lawyer for marital property and a financial expert.
With pensions, some courts may award the entire account to the employee-spouse and require this individual to buy out the interest of the non-employee spouse. This eliminates the need for ongoing involvement of courts until benefits are received upon retirement. Distribution method aside, valuing retirement plans is an important step that can have long-term implications.
An attorney specializing in divorce and property division will ensure that retirement accounts are valued correctly. If a QDRO is issued, the lawyer will verify that this complies with the law and is executed correctly. Clients will receive the retirement benefits to which they are entitled, allowing them to live comfortably during their golden years. Only an an expert divorce attorney can let you know what your options are, and speaking with one that provides a free consultation is oftentimes your first step to learning your rights and getting what you deserve.