Your Rights to Retirement Assets
Divorces takes a lot of work. After you’ve spent years building up a life with another person, it can be difficult to try and undo it. While this is hard for anyone, know that you’re not going through it alone. In fact, Kentucky’s divorce rate is the 6th highest in the country.
One of the most important aspects to consider in a divorce is how to divide your assets, even if you don’t feel you’ve accumulated that much wealth. Many people only think about obvious forms of wealth like homes and cars, but assets can also include investment accounts, including a 401K, IRA or Roth IRA, annuities, and retirement funds. If you’re going through a divorce and have questions about how your marital assets should be divided, call Caleb Bland Law, PLLC today. Our skilled team of attorneys can help you understand your options and work on your behalf so you can seek what you deserve. Our offices are in Elizabethtown, but we serve clients throughout the state, including Radcliff, Shepherdsville, Bardstown, Brandenburg, Leitchfield, Hodgenville, and Louisville, Kentucky.
Equitable Division of Marital Property
Marital property law in Kentucky follows an equitable distribution model, as do most states. This means that assets must be divided in a way that’s fair, but not necessarily equal. A number of factors are considered when dividing assets, including when the asset was acquired, under what circumstances the asset was acquired, and how much each spouse contributed to the growth in value of the asset over the marriage.
When determining asset distribution, Kentucky law makes a distinction between “marital property” and “separate property.” Most of the time, separate property is anything you acquired before the marriage (including sales that occur during the marriage of a previous property), anything you inherited or was gifted, and anything that’s named in a prenuptial agreement as “separate.” Marital property is generally defined as any property acquired during the marriage, property that was acquired before the marriage but both spouses are on the title (such as real estate purchased before the couple married), or property that was acquired before the marriage but has increased in value due to contributions made by both spouses (such as investments).
How Retirement Assets Factor In
It’s common to overlook retirement assets during a divorce, especially if one spouse started the investment before marriage. However, by doing this, you could be giving up money that’s rightfully yours. Even if you weren’t the one who initially opened the account, you may be entitled to any amount it earned during your marriage. Keep in mind that you still wouldn’t have rights to money that was earned prior to the marriage. When a couple or a court looks at the assets, they will determine what percentage of the account is separate and which is marital. You can then use the amount of the marital portion to determine your share.
This division can be decided by a judge or by the divorcing couple, but many choose to hire a family law attorney to help. You’ll have to consider all types of retirement assets that could warrant equitable division. This could be a Defined Benefit Plan, Defined-Contribution Plan, Military Benefits, Government Pension, saving accounts, or traditional retirement plans (401K, IRA, and annuities). For each of these, you’ll have to calculate how much you contributed toward them to determine what share you’re due.
Couples also may choose to “trade” assets instead of calculating their portion of each. For example, one spouse may keep the marital home while the other keeps the retirement account. If you decide to go this route, ensure that all assets have been properly assessed by a professional.
Qualified Domestic Relations Order (QDRO)
Once the division of retirement assets has been decided, you’ll then have to draw up a Qualified Domestic Relations Order (QDRO). This document outlines the asset division and gives instructions to the account plan administrator. Both parties will have to sign this document and submit it to a judge for final approval. A skilled attorney can help with drafting these documents.
After a QDRO goes into effect, it’s then up to each spouse what they want to do with their share. You may choose to transfer your portion of the balance into another account you have set up, or you may choose to cash out your portion. Note that if you choose to cash out, you may incur an early withdrawal penalty and should consult with a financial advisor before any action is taken.
How an Experienced Attorney Can Help
The decisions you’ll face during your divorce may feel overwhelming, but you owe it to yourself to consider every aspect. Your financial future will look quite different after a divorce, and if you don’t ensure an equitable distribution, you’re likely leaving money on the table that you helped earn. A qualified family law attorney can help you sort through your assets, determine which are marital and which are separate, then start compiling evidence of your contributions. At Caleb Bland Law, PLLC, we’re proud to serve those in Elizabethtown, Kentucky and beyond, including Hardin, Meade, Grayson, Breckinridge, Nelson, LaRue, Hart, Bullitt, and Jefferson Counties. Call us today to set up an appointment.