One of the most stressful parts of getting divorced is figuring out which spouse receives which assets. In a traditional divorce, couples typically rely on the court to determine an equitable distribution of all assets. This ensures that both parties get what is fair under the law. If you have retirement accounts or pension funds at the time of your divorce, the money in those funds can be subject to distribution. Here’s what your New Jersey divorce attorney wants you to understand about your retirement accounts and asset distribution.
Your 401(k) and Pension Can Be Part of the Divorce
401(k) accounts and pension funds count as part of the assets you bring to the divorce. This is true whether you’ve had the account for years or just opened the account when you changed jobs a few months ago. The presiding judge in your trial will determine how much of the accounts are subject to distribution based on what’s equitable, just as they would with tangible assets like your house, vehicles, and other marital property.
The Length of the Marriage and Value of the Accounts Matters
Just as with other marital assets, the court will take the length of the marriage and the value of the accounts into consideration when determining an equitable distribution. Typically, the longer you and your spouse were married, the more your spouse may be eligible to receive.
If the account is larger, your spouse may be eligible to receive more as well. Remember, the goal of the court is to ensure that assets are distributed equitably.
The court may also decide to award a higher amount of your retirement savings to your spouse if they’re unable to work, have fewer savings of their own, or are used to a more expensive lifestyle than they can afford to maintain on their own. Your New Jersey divorce attorney will be able to advise you on what to expect after looking at your financial situation.
What the Division of Retirement Accounts May Mean for You
Since your retirement savings can be distributed between you and your spouse, it can have a far-reaching impact on your retirement. The larger your account is and the more your spouse receives, the less you’ll have in savings for your retirement.
While it’s possible to catch up and rebuild your savings, doing so can be tough, especially if you’re nearing retirement age. If you find yourself in this situation, speak with a financial advisor and let them guide you on the next best steps.
Accounts You Opened Before Your Marriage May Be Yours to Keep
If you opened an account prior to getting married, you may be able to keep it separate from the assets being divided in your divorce. However, if you made contributions to that account while you were married, those contributions may be subject to division. Additionally, if your account’s investments grew in value, the growth may also be subject to division.
You’re Free to Come to an Agreement Prior to Your Hearing
The court can make decisions for you and your spouse, but they don’t have to. You’re free to reach an agreement on how your assets, including your retirement accounts and pensions, will be divided on your own. This allows you to decide who keeps what and may help you keep more of your retirement savings after the divorce.
If you choose to go this route, be sure to work closely with your divorce attorney. They can help you during conversations with your spouse and their attorney if needed.
Speak With a New Jersey Divorce Attorney
Don’t let the division of your retirement funds keep you from pursuing a divorce if your marriage no longer serves your needs. Contact Carvajal Law today to schedule a free consultation and see how our experienced divorce attorneys can help streamline your divorce.