During the divorce process, when the division of assets is considered, one of the key issues that is sometimes overlooked is how retirement benefits will be divided.
When people think of assets accrued during a marriage, the tendency is to think primarily about the home, other real estate, investments, savings, cash, cars, and valuables.
However, retirement accounts are often the largest asset after real estate in a marriage. It is sometimes omitted from calculations, especially when the divorce happens many years before retirement.
Retirement benefits must form a large part of the discussion when it comes to dividing the marital assets.
The family lawyers at Colorado Legal Group have extensive experience in guiding clients through the divorce process, including the division of assets, so that the divorce agreement leaves them in the best possible financial shape for the future.
What happens to retirement benefits in a divorce?
In divorce cases in Denver, the way that pensions, 401ks, and other retirement accounts are divided is generally based upon their increase in value during the time of the marriage.
This is usually decided at the same time that other joint marital assets are divided. However, it is not generally a simple calculation to make.
For instance, say you were married for 10 years but the retirement benefits had been amassed over a total of 30 years. Only a third of the retirement account would be considered “marital property” and only marital property is subject to division. If the Court chose to divide the marital property equally, each spouse would then be entitled to around 16.65 percent of the value of the retirement at the time of divorce. But in Colorado, division of marital property is not always equal, the Court will ultimately decide what is equitable or fair.
After the divorce is finalized, a court order (called a qualified domestic relations order or QDRO) is usually prepared by an expert to divide the accounts as shown, more on this directly below.