There is a lot that happens during the divorce process as many important issues must be addressed and resolved for a divorce to be finalized. One of the biggest and most hotly contested issues incident to a divorce is the division of the marital assets. It is no wonder that this is the case. Division of the marital assets can feel highly personal, not to mention the fact that it can have a profound impact on the financial future of the parties. Among some of the most prominent assets that may be subject to division in a Florida divorce, retirement accounts stand among those assets that can have significant consequences for the future of the soon-to-be-former spouses. Let’s take a look at how the division of retirement plans is handled in a Florida divorce.
Florida Divorce and Division of Retirement Plans
Florida is an equitable distribution state and this means that marital assets will be divided fairly, not necessarily equally, during divorce proceedings. Generally speaking, assets acquired by the spouses prior to marriage are considered separate property and are not subject to division. Alternatively, assets acquired by spouses over the course of the marriage are usually considered to be marital property and, thus, subject to division. Furthermore, assets that may have been obtained prior to marriage, but gained in value during the marriage, may be subject to division at least in part. This includes assets such as retirement accounts.
In order to divide marital assets, which can and often does include retirement accounts, the court will look at a number of factors to see how an equitable division can best be achieved. Some of the key factors to be considered will likely include the length of the marriage and how the retirement fund was established as well as what each spouse contributed to the fund itself. Additionally, the court will look at each partner’s non-financial contributions to the marriage, such as managing the household to support the other spouse’s work and accumulation of wealth in assets such as a retirement plan.
To actually divide a retirement account, the court will order a Qualified Domestic Relations Order (QDRO) which will direct the administrator of the retirement plan on how to divide the asset. A QDRO, however, is only used with certain types of retirement plans, such as a 401k or other types of company plans. For IRAs, a QDRO is not used. In order to divide an IRA, a direct transfer to someone else’s IRA account can occur. The added bonus of the direct transfer is that tax liability is avoided. In order to successfully avoid tax liability, however, there must be a divorce decree addressing the division of the IRA.
Florida Family Law Attorneys
Division of the marital assets, including division of retirement accounts, can impact your life, your financial future, and the age when you plan to retire. Be sure that your best interests are always being protected and talk to the trusted divorce attorney team at Bernal-Mora & Nickolaou. Contact us today.