If you have been aggressively saving for your future retirement, there is a great chance that you have a considerable amount of money in your retirement accounts. If this statement rings true for you and you are headed for divorce, do not assume that this money is entirely off-limits. A retirement account is considered an asset, so it could be on the table during the divorce proceeding.
An Asset Is an Asset
Again, a retirement account is an asset, and when it comes to divorce, an asset is an asset. Any form of property, cash, or other items of value that was amassed during the marriage, at least at first, are thought to be the result of an equal effort on the part of each spouse.
As a result, each party in the divorce must be upfront and honest and list these accounts on their asset list. Even if your spouse does not know about the account and you think you can hide the account, it will surface.
A common way that retirement accounts are settled is by way of a 50/50 split. With a 50/50 split, both you and your partner are required to combine the value of your retirement accounts and then split this figure in half. For example, if spouse A had $125,000 in their account and spouse B had $75,000, each party would walk away with $100,000. If there is only a single account, then its value is divided in half.
However, in some instances, only a portion of the value is considered eligible to be split. Given the previous example, if each spouse had $25,000 in their account before they were married, only$150,000 of these funds would be from the marriage. Therefore, each spouse would keep their original $25,000 and then get $75,000 from the split.
In terms of transferred ownership, in some unique cases, a person might be required to transfer ownership of their account to their spouse. The latter scenario is more common in a marriage with high-value assets that is absent a prenup.
A complete transfer of ownership can also occur when one party in the marriage earned less solely because they were supporting the professional growth of the other spouse. A person that tries to hide this asset could also see it awarded to their spouse.
The importance of working with an attorney cannot be understated. An attorney understands divorce law and will do everything in his or her power to ensure your retirement savings are protected under it and handled fairly.Share