Retirement is supposed to be the beginning of one’s golden years, a time to enjoy the fruits of a life’s worth of work. But for many people approaching retirement, divorce throws a wrench into what may be years of careful planning. Indeed, divorce can put one’s retirement assets at risk, and turn retirement into a season of stress.
If you’re getting close to retirement with a divorce on the horizon, your goal is to keep what you’ve worked hard to earn. That’s where the dedicated attorneys of Orlando Family Team come in. We can explain how divorce may impact your retirement, then get to work protecting it.
How Florida Divorce Courts Split Retirement Assets
Florida’s way of dealing with property division during a divorce is known as equitable distribution. That means the court will divide marital property equitably between the spouses. Two important terms should be noted: “marital” and “equitable.”
Marital property is generally defined as that which is acquired during the marriage by either spouse, regardless of whose name is on it. Equitable distribution is only concerned with marital property. Meanwhile separate property, which is earned before the marriage, is not typically subject to equitable distribution. In practical terms, what this means is that anything earned by either spouse before the marriage will usually not have to be shared with the other spouse.
When the court divides retirement assets, it has to distinguish between separate retirement (earned before the marriage) and marital retirement (earned during the marriage). This can be a complex calculation, especially when pensions are involved. Nonetheless, whatever portion of retirement you earned before you got married will likely not be included in the court’s equitable distribution plan.
The second term to understand is equitable. Equitable means fair, not equal. So even with respect to the marital portion of your retirement, the court will not necessarily divide it 50/50. You may even be able to keep all of your retirement, depending on several factors the court will consider.
What Factors Will The Court Look At During Equitable Distribution?
Remember, equitable means fair. The court wants to divide property in a manner that is just based on the circumstances of the spouses. To do this, the court is required to consider a list of statutory equitable distribution factors. Some of those factors that are relevant to retirement assets include:
- The contribution to the marriage by each spouse
- The economic circumstances of the parties
- The duration of the marriage
- Any interruption of personal careers or educational opportunities of either party
- The contribution of one spouse to the personal career or educational opportunity of the other spouse
- The desirability of retaining any asset, intact and free from any claim or interference by the other party
These and other factors could come into play in your marriage. For example, let’s say that for several years after your marriage, you contributed substantially to your own 401(k). Later, you decided to delay your career advancement to allow your spouse to develop theirs. You chose to pass up a promotion or work more hours. This, in turn, means you gave up growing your retirement. Meanwhile, your spouse advanced their career and began growing their retirement.
When it comes time for a divorce, you will want your attorney to understand details like these as they relate to your marriage and your respective careers. Presenting evidence like this to the court can support your claim for a greater than 50% share of your retirement, or possibly for keeping 100% of your retirement.
What Other Strategies Might Help My Case?
Using Florida’s equitable distribution factors to your advantage is just one approach that might help you retain more of your retirement. Another possibility is trading assets with your spouse. For instance, you may not care as much about getting the marital home in the divorce as you care about keeping your retirement. Many spouses prefer the security of a pension or well-funded IRA versus keeping the home they lived in during the marriage.
Equitable distribution doesn’t require dividing each asset. It’s possible for one spouse to keep all of their retirement, and to offset that by giving the other spouse 100% of some other asset. In this way, both spouses achieve a fair property division but don’t necessarily have to share every single asset.
Another possible approach is to negotiate a pre-trial settlement of equitable distribution. This may take the form of mediation or something less formal like discussions between the attorneys. Many Florida equitable distribution cases settle before they reach the courtroom. This saves time, money, and often achieves a much better outcome than having a judge make the decision.
Questions About Retirement And Divorce? We Have The Answers
We understand the stress you’re feeling if you’re close to retirement age and going through a divorce. After all, you’ve worked hard to grow a nest egg and want to protect it. Let the compassionate attorneys of Orlando Family Team help. We can explore strategies that may let you keep more of your retirement so you can have financial confidence moving forward. Reach out to us to schedule your confidential consultation today.