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Are You Divorcing as You Approach Retirement?
If you are nearing retirement and you’re divorcing in Northern Kentucky or Ohio, you must protect your retirement savings. A Covington divorce attorney can help protect your retirement funds and represent you in a divorce proceeding.
The Pew Research Center reports that the divorce rate for those over age 50 has doubled in the last quarter-century. At any age, divorce can be emotionally challenging, but as you approach retirement, if you fail to protect your assets, divorce can also be financially devastating.
In a divorce proceeding, when you have retained the services and advice of a Northern Kentucky divorce lawyer, that lawyer will protect any retirement funds that are yours and yours alone.
What Financial Information Will You Need to Disclose?
In a Kentucky divorce, both spouses must file complete financial disclosures with the court. Your disclosure must account for your income, assets, properties, and debts. A Northern Kentucky divorce lawyer will help you with the paperwork to ensure it is complete and accurate.
Spouses must disclose all of the personal and marital assets and properties they have earned or otherwise received during and prior to the marriage. Any failure to disclose assets in a Kentucky divorce constitutes contempt of court and may trigger harsh legal penalties.
Financial disclosures provide the court with an account of each spouse’s current financial status. The court considers the disclosures when it decides on a just and equitable division of the marital assets and properties.
Will a Judge Divide Your Marital Assets?
If you and your spouse do not want a judge dividing your assets, you may prepare a voluntary written agreement to divide the assets and resolve any related matters. A divorce proceeding moves faster and costs less when divorcing spouses can find ways to agree and compromise.
Presuming your agreement is fair to both parties and complies with Kentucky law, a judge will approve it. If there’s no agreement, the court will divide marital property equitably but not necessarily equally. A “fair” distribution does not necessarily require a precise 50/50 split.
The court examines the complete picture of the marital assets and may trade off one asset for another – the marital home in exchange for a retirement account, for example. Personal property, such as assets owned before the marriage, inherited, or received as gifts, stays with the owner.
How Are Retirement Funds Divided in a Kentucky Divorce?
Kentucky courts presume property acquired during a marriage is jointly owned marital property. Often, retirement funds are an older couple’s most valuable assets. How will a Kentucky court divide and distribute a divorcing couple’s retirement funds after a lengthy marriage?
First, the court must determine the value of the retirement assets. Some accounts have a precise balance (like a 401(k), for example), but other retirement accounts, like pensions, require calculations to project their future value.
What Do the Courts Consider When Dividing Retirement Accounts?
When the valuation of a retirement account is complicated, you may need a financial expert to ensure a just and accurate division of the account. Divorce courts in Kentucky consider the following factors when determining how to divide and distribute retirement assets, including:
- the marriage’s length
- each spouse’s contribution (including non-financial contributions) to the marriage
- each spouse’s current financial situation and earning capacity
- whether one spouse supported the other’s education and/or career
Interest, the fluctuating value of pensions, withdrawals, and loans against retirement accounts may complicate a divorce court’s division of these assets. Some couples choose not to divide retirement accounts and instead place the value of the accounts into more easily divided assets.
Is Your Retirement Account Subject to ERISA?
Private employer-provided retirement plans that are subject to ERISA (the Employee Retirement Income Security Act) may be divided without a tax penalty.
Dividing a plan that is subject to ERISA requires the court to issue a Qualified Domestic Relations Order (QDRO), a separate court order that spells out how the assets will be distributed. A QDRO must comply with state and federal law and the retirement plan’s requirements.
When the court issues a QDRO, the order goes to the plan administrator for approval. Upon the QDRO’s approval, the spouse receiving the assets may transfer them to an IRA without a tax penalty. But if that spouse takes a distribution of the funds, the distribution is taxable (unless the account is an already-taxed Roth IRA).
What Else Must Be Considered When Marital Assets Are Divided?
If you are approaching retirement and divorcing in Kentucky, you must protect your retirement benefits. Ask questions. Read the legal paperwork. Be prepared. A Covington divorce attorney will help you understand what is at stake and what you will need to do to protect your future.
Unless you are a financial expert, you will need legal guidance from an experienced attorney regarding the division and distribution of your retirement funds and other assets in your divorce. Do not attempt to act as your own attorney in a divorce proceeding. Too much will be at stake.
A family law attorney at the Law Offices of Shannon C. Smith can offer an evaluation of your case, explain your legal options, and help you make the right choices for yourself and your future.
Let the Law Offices of Shannon C. Smith Represent and Advise You
In every state, family law and divorce laws are exceedingly complicated. If you are divorcing, considering divorce, or anticipating that your spouse will be divorcing you in Ohio or Northern Kentucky, schedule a free case evaluation now with the Law Offices of Shannon C. Smith.
Covington divorce lawyer Shannon C. Smith leads a team that offers candid advice and ensures clients receive what is rightfully theirs at the conclusion of the divorce process. We will ensure the court treats you fairly, and we’ll bring your divorce proceeding to its best possible outcome.
We have considerable experience resolving the most complicated divorce disputes. Now or in the future, if you choose to divorce, or if your spouse chooses divorce, contact the Law Offices of Shannon C. Smith at 859-414-0543, and put our legal team to work for you.
