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7 Things to Consider Before Dividing Your Retirement Assets

broken piggy bankUnlike some other states, Florida provides for a fair and equitable distribution of marital assets. Throughout a divorce, the courts, ex-spouses and attorneys will work together to determine the most fair way to divide all marital property. Marital property is any asset that was acquired throughout a divorce by either party. This means that an inheritance of one of the ex-spouses will still be considered marital property if it was acquired during the marriage. Other forms of marital property include cash, bonds, business assets, physical property and retirement benefits. Retirement benefits are a unique situation. Many individuals are surprised to learn that their retirement account, even if it's under their own name, is still considered a marital asset and is still subject to fair and equitable distribution.

1. What About Life Insurance Policies?

A life insurance policy can sometimes be a good alternative when considering retirement account division. You should consult with both your financial adviser and your divorce attorneys in Jacksonville, Gainesville, Daytona, Fleming Island, Boca Raton or Fort Walton before making this decision. Whole life and permanent life insurance policies are also considered on par with investments, retirement accounts and other similar accounts, and this should be kept in mind throughout the division of property

2. What About Multiple Accounts?

If you have multiple retirement accounts, or if both you and your ex-spouse have retirement accounts, you may be able to equalize the accounts. Equalizing can be fairly difficult, and a financial adviser may be required to complete the equalization properly. You can consult with your divorce attorneys to determine whether equalization might ultimately be beneficial for you. Equalization will allow you and your ex-spouse to retain the most capital possible, but it's only cost-effective if you already have a significant amount in your retirement funds.

3. How Are Beneficiaries Decided?

In some cases, you and your ex-spouse will become each other's beneficiaries. However, you can also change this so that your respective new spouses or your children become beneficiaries. Different plans and different types of division will require different methods.

4. How Do You Divide the Account?

You need to consult with your plan administrator regarding the division of your account. Sometimes, the division will consist of two separate retirement accounts being created, one in each of your names. Your ex-spouse can then do anything they desire with their account and you can do anything you desire with yours. Other plans may require that you dissolve the retirement accounts entirely. You can consult with your plan administrator and divorce attorneys in Jacksonville, Gainesville, Daytona, Boca Raton, Fleming Island and Fort Walton for more information.

5. Did You Contribute Before the Divorce?

In general, amounts you contributed before the divorce will be considered your own personal property. However, there may be exceptions to this rule. You will need to specify when the marriage began to ensure that the retirement account is split appropriately. Unfortunately, this only includes the amount you had before your marriage and does not include the interest gained on that amount following your marriage. If you put $50,000 into an investment, including a retirement account, before your marriage and gained $4,000 in interest over the course of your marriage, only the $50,000 initial investment is considered personal property.

6. Have You Been Contributing after Divorce?

If you contribute to your account after your divorce, it is considered your separate property. However, you should keep in mind the fact that you won't be considered divorced until the divorce is finalized. You should stop your contributions throughout your actual divorce period for this reason. A separation does not count as a divorce, even if the divorce is completed. 

7. Are You Already Retired?

Many individuals are getting divorced later in life. If you're already retired, your ex-spouse may be able to take a part of your retirement payments. However, it's not likely that they will be able to take a lump sum payout. Unfortunately, it also means that you may have your fixed-income significantly reduced. You may need to consult with your divorce attorneys regarding whether this would truly be a fair division of your retirement assets.

Divorce attorneys are extremely vital for anyone going through a divorce in Florida. Determining a fair and equitable distribution of assets is a very complex process, and those without legal aid may quickly find themselves overwhelmed. When separating marital assets, everything that you have gained throughout your marriage will be up for grabs. Often, only an attorney will be able to protect you from losing a significant amount of your personal property through the divorce.

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