Partner
A divorce can affect your long-term financial security as much as it can impact your short-term outlook. You may be a long way from retiring when you and your spouse divorce, but how your retirement accounts are handled now can impact your future retirement plans.
New York courts have found that pensions and retirement accounts qualify as marital property and are thus subject to division by a divorce court. The fact that the retirement account is connected to your employment does not exempt it from this designation. However, there are ways you can protect your future retirement benefits in your divorce.
Marital Property and Its Division
Marital property is subject to fair and equitable division in New York. While this does not mean that each spouse walks away with a perfectly equal share of the marital property, courts will try to treat each spouse similarly and not disadvantage either spouse when dividing marital property during a divorce.
Generally speaking, all property and assets that you or your spouse acquire during your marriage are considered marital property. This includes any asset that you brought into the marriage that appreciated in value during the marriage.
For example, suppose that you started a retirement account prior to marrying your spouse. Any additional contributions during the marriage as well as the increase that the account experienced during the marriage could be considered marital property. If your retirement account grew by $100,000 during the marriage, your spouse would have an interest in that $100,000 increase. But it is your burden to show what the account was worth at the time of your marriage as well as any increase attributable to that amount.
A pension can also be a very valuable asset, which can either be distributed at the time of retirement, sharing the benefit that is earned during the marriage (but not before or after the marriage is over) or a pension can be valued by an actuary and considered as an offset against other assets at the time of the divorce, such as a house or other retirement accounts.
Strategies for Protecting Your Retirement Accounts in Divorce
There are two ways to protect your retirement account from being included in the property division of the court. These two strategies include:
Prenuptial or Post-Nuptial Agreements
You and your spouse can contract either before or after you marry that your retirement accounts will remain your separate property in the event of a divorce. As long as you are transparent and forthcoming with your partner when making this agreement and allow them to consult with an attorney before signing, courts will generally uphold and enforce these agreements during a divorce.
There are requirements that each type of agreement must meet, so it is best to enlist a Garden City divorce lawyer’s help in drawing them up. If courts do not believe your agreement complies with the necessary formalities, they can disregard them and proceed with dividing your retirement accounts.
Offset the Retirement Account With Other Property
The other strategy for retaining your entire retirement account involves entering into an agreement with your spouse during divorce to provide them with property of a value similar to your retirement account. This agreement could be reached either through a collaborative divorce or as an agreement in an otherwise contested divorce proceeding.
For instance, assume your spouse could reasonably expect to receive $100,000 from your pension or retirement account. If you were intent on retaining the full value of your retirement account, you could find other property of a similar value and offer this to your spouse.
The marital home or another investment account could ensure your ex has no future interest in your retirement account while still satisfying the court’s need to divide property fairly.
When to Seek Help From a Garden City Divorce Lawyer From Aiello & DiFalco
The sooner you enlist help from an experienced family law attorney from the Garden City, NY, law firm of Aiello & DiFalco, the greater the chance of preserving valuable assets like retirement accounts. Contact Aiello & DiFalco today if you are contemplating divorce or if your spouse has filed for divorce. We will identify valuable assets like retirement accounts and help enact strategies to protect them and your future.