What are the options for managing retirement accounts in your divorce in Shepherdsville, Mount Washington, Shelbyville, Taylorsville, Radcliff, Elizabethtown, Jeffersontown, or Louisville, Kentucky? Many people underestimate, fail to understand, or completely overlook one of the most significant assets in any divorce case: retirement accounts and pensions.
My name is John Schmidt, and after more than 25 years of experience as a divorce and family law attorney based in Shepherdsville, I can tell you that “equitable” division of marital property in a divorce case can be anything but “equal,” and retirement assets are often the last thing on some of our client’s mind when they contact our offices, even though these assets may represent the largest actual available interests to be addressed and divided during a divorce. There are several viable options for managing retirement accounts in your divorce. Which will be best for your unique circumstances?
Retirement assets, at least from the date of marriage, are generally considered marital property, subject to equitable division under Kentucky family law. This includes any 401(k), Pension, teachers’ or public employees’ retirement benefits, military retirement and benefits, IRA, 403(b), or Thrift Savings Plan (TSP). The value of the amount to be divided as marital property will be based on the amounts contributed during the term of the marriage, as well as the growth of those funds that are considered to be “marital” in nature.
In many cases, the Court orders or the parties agree to divide each of these accounts in some manner. There is a specific document required by each plan’s administrator (most often a Qualified Domestic Relations Order or QDRO) that must be specifically tailored to the unique verbiage required by each individual plan. If there are multiple retirement accounts with various providers, a separate QDRO or similar order will be needed to accomplish the division agreed upon by my client and the other party, or as ordered by the Court.
There are potential tax implications of dividing any retirement asset, including a substantial penalty when retirement accounts are physically divided. These factors must be balanced during the process of marital property division.
Another of the options for managing retirement accounts in your divorce is to offset one’s marital interest in the retirement asset with a spousal interest in another marital asset. For example, one spouse may own their own business and want to retain 100% ownership of the corporation after the divorce is finalized. The business owner may agree to offset their former spouse’s marital interest in the business in return for the business owner’s interest in the retirement account(s) of that spouse. Equity in the family home may be another option to offset the marital interest in a retirement asset (or business).
There is also the option to keep one’s own retirement assets, especially when the valuation of each spouse’s retirement assets is relatively equal. Based on our decades of experience, we can tell you that there are several viable options for managing retirement accounts in your divorce. Each case is unique, and this is why you need the experienced, proven advice of the Law Offices of John Schmidt & Associates.
We invite you to contact us via e-mail, schedule an appointment or call us today at (502) 509-1490 to get answers to your questions and to learn more about your unique circumstances and how to protect what is most important to you in your family law case.
