Divorce is a significant undertaking that affects every area of your life as you navigate the difficult process. Even in an amicable divorce, fully separating your personal effects and finances from your spouse requires time and consideration. Although property division and child custody are well-known aspects of divorce, retirement asset division is an important part of finalizing the process. Ensuring your retirement funds are protected should not be left to chance when you separate from your spouse. Many spouses in Anaheim, CA create their retirement plans together, so separating these funds can be difficult.
Losing out on the retirement funds that you have built up can have disastrous effects on your long-term life plan, potentially forcing you to work for many more years than you originally intended. Speaking with an experienced retirement asset division attorney can ensure that you head into your divorce with the knowledge, experience, and support to keep all the retirement funds that you are entitled to. Moranda Law Firm, APC, can help you navigate all aspects of your divorce, including retirement asset division.
During a divorce, there are two types of property: community and separate. Different states have different laws for how these property types are defined, but in California, they are defined as follows:
In most instances, retirement accounts are considered community property that must be divided during a divorce. Because the accounts were contributed to during the marriage, California considers these funds to belong to both spouses. This protects both spouses in the event of an income disparity or if one spouse stays home to take care of the home and/or children.
The court may issue special orders to ensure these benefits are divided equally. Some retirement accounts require a special order, called a Qualified Domestic Relations Order (QDRO), to be given to the retirement plan administrator for the funds to be split.
Retirement plans that must be split with the assistance of a QDRO in a marital property asset split include:
QDROs are not required to divide the following retirement plans:
There are generally two potential routes for dividing retirement plans during a divorce:
In an amicable divorce, the spouses may be able to create a mutually beneficial plan for their retirement accounts as well as other community property and assets in the marriage. If the couple is unable to create a plan for their marital assets, including retirement accounts, the judge will draft a property division plan.
A: There are many circumstances where the lower-earning spouse will qualify for a portion of the retirement account. Both spouses contributed to the marriage, one by earning an income and one by maintaining the home, so California law states that both spouses are entitled to at least a portion of any retirement plans.
A: For contribution plans like a 401(k) or IRA, the value is determined by the current statement. More complex retirement plans, such as a corporate plan or pension plan, may require the skills of an actuary to determine their value. Both spouses are given the opportunity to have the plan evaluated. If the values are different, both actuaries must appear in court, and the judge will make the final determination of value and division.
A: A QRDO is a domestic relations order that recognizes or creates the existence of another person’s right to receive all or some of the benefits that are payable to the retirement plan owner. Without this document, many retirement plan administrators are unable to identify the other spouse as having an interest in the plan and cannot make any distributions to the other party.
A: Separating retirement plans can be difficult, especially if the spouse’s retirement accounts are not equitable. There may be unique laws for the retirement plans that you and your spouse share. An attorney can help you evaluate your accounts and determine any applicable laws, protecting your retirement benefits and ensuring your financial future.
Equally separating every asset, property, and debt acquired during your marriage can be a difficult process, especially as you navigate the hard emotions that come with the end of your marriage. Working with an experienced divorce attorney can help ensure you are financially protected after your divorce, especially if each spouse does not have their own retirement account.
Whether you are anticipating a contentious situation or a more amicable resolution, Moranda Law Firm, APC, can help. Our firm is tenacious in protecting our Orange County clients by ensuring they leave their divorce with everything to which they are entitled. For a consultation with our skilled staff on your divorce and retirement account division, reach out to our office today.