During a divorce, the distribution of assets and money is a tense subject. Many people do not understand the legalities associated with how the distributions are determined. Individuals, more times than not, apply their own non-legal thoughts and ideas to the process. It is true that the equitable distribution of assets, such as retirement accounts, can become very complicated, however, there are some fundamentals which are relatively simple, and that apply to most scenarios. Below we will discuss the equitable distribution of retirement accounts.
Let’s first demystify the term ‘equitable distribution.’ It is a term that is commonly misinterpreted to mean equal or 50/50. That is not necessarily true. There are many variables which come into play when a judge is determining what is equitable. A more accurate way to approach the term may be to think of it as a determination as to what is fair.
Pre-Marital Retirement Account Funds. Money that has accumulated and grown in an account which was established prior to the marriage is labeled as pre-marital. Typically, ex-spouses do not have a right to pre-marital funds. However, even if the account was established and partially funded prior to the inception of the marriage, if there were contributions made during the course of the marriage, those contributions will be separated and considered as part of what an ex-spouse is entitled to under equitable distribution.
Contributions Made During The Marriage. Contributions or growth of a retirement account made during the marriage are subject to equitable distribution and an ex-spouse may have a right to those funds, in the event of a dissolution of the marriage.
There are several types of retirement funds. Each type has different tax implications and restrictions associated with how and when the funds are extracted or disbursed. Those tax laws and early distribution penalties do come into play when a judge is deciding on what is considered equitable during a divorce proceeding.
To aid in the process of outlining the entire impact of a decision, and to keep accurate records of payments made to a former spouse, a form known as a QDRO, or qualified domestic relations order, is prepared whenever a distribution of retirement account funds is made during a divorce.
Some retirement accounts, such as those developed and overseen by the military for military employees, have a set of guidelines that differ from those which are applicable to the general public. For instance, a military employee who is entitled to pension benefits will have a set of rules that outline if, and how much of those pension funds an ex-spouse may receive.
In any scenario that is before the court, factors such as length of marriage, contributions to the marriage, minor children, work history of both spouses, and the overall economic status of the individuals divorcing may be considered.
These issues should always be decided with an experienced and qualified Orlando based law firm. Call Konicek Law located at 1309 E Robinson St. Suite 200 Orlando, FL 32801 to set up a consultation.