During a divorce, your retirement account likely isn’t your immediate concern. Divorce involves many complex decisions, such as arranging child custody and spousal support, and your attention is focused on contending with those matters. Retirement funds can’t be accessed for many years, after all. But divorce is often a long and complicated process, and when it’s time to divide your marital assets, you may worry for your future at the prospect of losing your retirement investments.
There are several ways that retirement accounts may be divided in a divorce. Contact a Michigan divorce lawyer at Van Den Heuvel Law Office to discuss your situation.
Typically, retirement accounts and investments are split equitably in a Michigan divorce. This means that the assets aren’t necessarily split to an equal 50-50. Instead, the court will decide what amount is fair based on the support histories of each spouse. Accounts that may be split include:
These accounts are divided between the spouses unless one party made no contributions, whether monetarily or by supporting the other spouse’s earnings. While some retirement accounts are divided by an even 50-50 split, they are usually divided while considering other assets relevant to the divorce. For instance, the court may also consider cars, the family home and other marital property while deciding how the retirement accounts will be split.
A QDRO, or a “qualified domestic relations order,” is legal documentation that avoids tax consequences while splitting retirement and investment accounts. The court uses a QDRO to decide the exact amount that each spouse will receive from the accounts that will be divided. Typically, the benefits are paid at the standard retirement age.
Divorcing couples should also be aware of the Retirement Equity Act, which determines how retirement accounts will be split between both spouses in a divorce. This federal law uses the QDRO when ordering the specific dollar amounts that will be granted to each party.
If a spouse acquired their retirement or investment funds before the marriage, then the original amount may be granted in whole to the spouse who made the investments. If the courts deem the funds to be non-marital property, then the spouse will retain the entire amount. However, if the retirement accounts gained interest during the course of the marriage, that value will likely be considered divisible between spouses in the QDRO.
Divorce is often a contentious time for your family. Before progressing to the next steps, you should call our Grand Rapids divorce lawyers at the Van Den Heuvel Law Office to discuss your case. We provide in-depth legal guidance for clients seeking assistance with property division and other key divorce-related matters. If you are concerned that your divorce will put your retirement funds at risk, we can help you determine a course of action.
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