People in West Michigan considering divorce are often anxious about the financial consequences of splitting their property. Those who have a long employment history might have a well-funded retirement savings account, such as a 401(k), that they made contributions to throughout their career.
Those who work for some of the area’s largest employers, such as furniture and automotive businesses, or who are educators, might actually have accrued pension benefits. They can receive regular payments throughout retirement, which both spouses may have factored into their retirement plans.
Are those retirement resources divisible when people divorce?
Marital income and assets are divisible
Under equitable distribution rules, spouses typically need to report income earned while married and any assets acquired with that money as part of the marital estate. They must work out an arrangement to split their property or go to court to litigate property division disputes.
Pensions and retirement savings accounts are often in the name of one spouse. However, people fund them with income during their marriages. Any amount earned, saved or accrued during marriage is potentially part of the marital estate that spouses must divide when they divorce. There are special documents that can allow for the direct division of retirement savings accounts without financial penalties.
Spouses might also use other assets or responsibility for marital debts to offset the value of retirement savings or pensions. The courts can also use spousal support as a way of dividing a pension once one spouse begins receiving payments.
Knowing what property is divisible can help people work toward a reasonable divorce settlement. A thorough review with a family law attorney can help people understand the law and determine what property they must divide when they divorce.