Planning for retirement is important to your security as you grow older. If you are like many couples in Michigan, you and your spouse probably created a retirement plan. Whether you opened your own savings account, used an employer-sponsored 401k or have a pension coming to you when you retire, it’s important that the amount you have set aside reflects the age at which you intend to retire and the standard of living you hope to maintain.
Unfortunately, a divorce can throw all of that planning completely out of whack. Your plans no doubt involved you and your spouse maintaining the same home and sharing expenses. In other words, you might need to start thinking carefully about your retirement finances if you are close to that age and headed for divorce.
Most couples will split their retirement funds
The most common outcome in a divorce with retirement assets is for each spouse to receive a share of those assets. Even if the account is just in your name or owned solely by your spouse, both of you have an ownership interest in the amount of money deposited into the account during your marriage. The courts will view that as marital property and likely divide it.
Even if you have a pension, which isn’t an account with a specific amount of money so much as the promise of a percentage of your wages every pay period or month after you retire, the courts will probably split that, too.
There are some special considerations that will affect how the courts divide your accounts. Those considerations include the length of your marriage, your individual contributions to the marriage, each spouse’s financial circumstances, health issues and many other factors. Still, you can anticipate that each spouse will receive a portion at the end of the divorce.
The courts have a lot of discretion in how they handle asset division
Splitting up possessions in a manner that is fair is highly nuanced. Many different considerations influence the best way to handle asset division, including the form in which you hold your assets.
If you have a traditional savings or investment account, the courts may simply order you to divide it. If you have an actual retirement account, the courts can issue a Qualified Domestic Relations Order and instruct the plan manager to put a portion of the account balance into a second account.
Sometimes, instead of splitting the actual account, courts will give the other spouse valuable assets in a comparable amount to their share of the retirement savings. Other times, including with complex pension plans, the courts could order spousal support as well. Sitting down and talking to an attorney can help you determine which outcomes are most likely in your situation and what would be most beneficial for you in the divorce.