During a divorce, the process of equitable distribution is used to divide marital property. Not everyone understands, however, that marital property can include certain retirement accounts. Although the account is only in the name of one spouse, the other could be entitled to some of it. Regardless of whether your retirement is at issue, or whether it’s your spouse’s, you should know how the process works. A Greenville, SC family law attorney can guide you through this critical aspect of your divorce.
On paper, retirement accounts belong to only one spouse. This doesn’t necessarily mean, however, that the spouse whose name is on the account will walk away with it all. If the retirement account started after your marriage, it may be considered marital property. The same is true if you started an account while you were single but contributed to it after marriage. And the reason for these rules is the process known as equitable distribution.
Equitable distribution is used in Greenville, SC divorces to split marital assets. Equitable means fair, so the role of the court is to determine how to fairly divide these assets. There are many factors a judge will look at to arrive at an equitable outcome. For instance, let’s say your spouse had a high-paying job before you got married. But after marriage, she decided to stay home and manage the household so you could further your career. Due to her contributions to the marriage, you were able to earn promotions over the years. Those promotions meant more money from each paycheck going into your retirement. A Greenville, SC divorce attorney could argue, therefore, that your spouse should be entitled to some portion of that retirement.
Let’s say your retirement account had a balance of $10,000 before your marriage. Perhaps you contributed nothing to it after you got married. Or, you contributed another $5,000 to it, but can reliably separate that from the $10,000 (excluding considerations of interest). That $10,000 should be all yours, right? Perhaps – but perhaps not.
Even if some, or all, of your retirement account, is non-marital, it may be treated as marital. This could be the case if the non-marital portion is treated as a marital asset. For instance, the spouse whose name is on the account may add the other spouse’s name to it. This could indicate a desire to make the account marital. Any time that otherwise separate assets are treated as marital, it could alter the nature of that property. Talk to an experienced Greenville, SC divorce attorney about these equitable distribution questions.
To split a retirement account, it first has to be valued. If the entire account is marital, you’d start with the account balance at the time of the divorce filing. You would add in interest that has accumulated on that balance, and take out contributions made after the filing date. If the account is only partially marital, compare the balance on the marriage date to that on the filing date.
These calculations are not always straightforward and may require bringing in a financial expert. The decision to hire an outside expert should be made in consultation with your Greenville, SC family law attorney. These witnesses have to be paid, and may not be worth it depending on the value of the account. In that event, your attorney can estimate the appropriate figures.
In some cases, it’s easier just to allow the spouse whose name is on the account to keep it. Then, the other spouse can negotiate some sort of buy-out for his or her interest. She may take the house or a cash payoff in exchange for leaving the account undivided. Discuss these and other options with your Greenville, SC attorney.
We Can Help With Your Divorce Issue
As with any aspect of divorce, dividing a retirement account is challenging. You can’t afford to undertake this process alone. Trust the experienced team at Greenville Family Law. We can break down these issues for you and advise you on the best way to handle them. Call us today.