What Florida Couples Need to Know About Retirement Assets and Divorce

August 02, 2012 (Press-News.org) What Florida Couples Need to Know About Retirement Assets and Divorce

As people are living longer and the reliability of Social Security is more in question, many are devoting a great deal of money to retirement savings plans. Dividing these assets as part of a property division settlement in a divorce can become complicated. Those in Florida who are considering divorce should be aware of how the court treats retirement assets in divorces.

Retirement Assets as Marital Property

Income that either spouse earns during a marriage is considered marital property. Retirement assets are also marital property, since people make deposits into them with marital funds -- no matter if only one spouse's name is on the account. If a spouse opened the retirement account prior to the marriage, the funds in the account would be personal property. However, any appreciation in the value of the funds in those accounts during the marriage is marital property.

Florida Property Division Factors

Florida is an equitable property division state, which means in a divorce the court will divide marital property between spouses in the manner which it believes is most fair -- not necessarily equally. Some of the factors the court considers when dividing property include:
-Each spouse's contribution to the marriage, including homemaking and child-rearing duties
-Each spouse's economic circumstances
-How long the marriage lasted
-Whether either spouse interrupted a career for the benefit of the family
-Whether either spouse contributed to the education of the other
-How much each spouse contributed to the acquisition of assets or debts in the marriage
-Whether one spouse should keep the marital home for the best interests of any children in the marriage
-Whether any spouse intentionally dissipated marital assets
-Any other factors the court believes is relevant

Qualified Domestic Relations Orders

If the couple's retirement assets include a 401(k) account or a company pension plan, the court must issue a Qualified Domestic Relations Order before the administrator of the account can disperse funds to the non-employee ex-spouse. The QDRO will allow people to withdraw funds from one account and deposit them into another retirement account without having to pay early withdrawal penalties.

IRAs and SEPs do not require QDROs, but people still need to exercise caution when dividing funds in these accounts. Unless the divorce settlement contains very specific language about the funds, the spouse who withdraws money from these accounts could incur tax penalties and early withdrawal penalties.

Dividing retirement accounts can be very complex. It is important to have a capable divorce attorney draft the documents involved.

Article provided by Busciglio & Sheridan Law Group
Visit us at http://www.buscigliosheridan.com