Retirement Savings and Pension Plans in Divorce

The process of dividing assets and debts in a divorce can be very complex and confusing. Some assets—like a paid-off car or television—are fairly easy to identify as part of the marital estate, and allocating them to one spouse or the other is relatively straightforward. Other assets are not quite so simple to handle. Retirement investments and pensions, for example, present a number of complications in a divorce proceeding, and it is important to understand the factors that could impact how such assets are divided.

Marital and Separate Property

With a few limited exceptions, any property acquired during the marriage by either spouse is considered marital property in divorce. Property that either spouse owned at the time of the marriage is almost always considered separate, or non-marital, property. Retirement savings and pension plans are among the few assets that may contain portions that are marital and portions that are non-marital and determining that balance can be challenging.

One of the most important things to keep in mind is that even a retirement plan that was established prior to the marriage is likely to include at least some marital fund. For example, assume that you started working for a particular company that offered a retirement savings plan before you ever considered getting married. Ten years into your employment, you decide to get married and start a family. You continue to work for the same company, but 15 years later, you and your spouse get divorced. While there may be some variation based on the individual circumstances, the value of the retirement savings that was accumulated during the first ten years would be considered non-marital property. The value accumulated during the 15 years of marriage, however, would be subject to division in your divorce.

Complicated Calculations

Determining the exact value of the marital and non-marital portions of a retirement account can be very challenging. Many such accounts invest deposited funds in various ways, and the day-to-day value of the entire plan is virtually always in flux. Depending on the circumstances of your divorce, you may need to enlist the help of a financial professional trained to make complex calculations and trustworthy forecasts about the current and future values of each portion of your retirement plans.

Once a proper value is established, both the non-marital and marital portions of your investments will be considered as the court equitable divides the marital estate. While only the marital portion is subject to vision, the non-marital portion must be taken into account as part of that spouse’s resources and economic situation.

Let Us Help

If you and your spouse are thinking about divorce but you are unsure about how your complicated retirement investments may be handled, contact an experienced Orland Park divorce lawyer for help. Call Kezy & Associates at 708-518-8200 for a free consultation at any of our three convenient office locations.