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Divorce and your retirement savings

| Jul 10, 2020 | Divorce, Family Law, Property Division |

Property division can be a particularly stressful part of a divorce. You have spent years building a life, buying a home and saving for the future, and dividing this property will leave you with fewer resources. This is especially true of your retirement savings, and dividing that savings could put your finances in a precarious position. How will the court divide retirement savings in a divorce?

The court will probably divide your retirement savings.

Arizona is a community property state. Under community property law, the court views the assets acquired during a marriage to be jointly owned. In divorce cases, the court will divide this community property evenly between the spouses unless a prenuptial or postnuptial agreement acknowledges some assets as the separate property of one spouse. The court will probably divide the portion of your pension, your retirement savings, your 401(K) IRA and the rest of your savings that you earned during your marriage.

When the court divides your retirement savings, the court order will offer you some protection. A Qualified Domestic Relations Order (QDRO) details the division of your property and, if necessary, the payment of one ex-spouse’s share of a pension plan. It also allows for the separation of retirement accounts without the penalties that would usually accompany a payout.

Divorced spouses may have the right to social security benefits on their ex’s record.

Many people rely on their social security benefits in addition to their retirement savings to maintain their comfort in their later years. If a marriage lasted a decade or more and they are still unmarried, a person can receive benefits based on their ex’s record if their ex is entitled to receive higher payments. This is true even if their spouse has remarried or if they are still working, as long as they meet the requirements set by the Social Security Administration.

Because your future financial health depends on your retirement savings, it is essential to work with a divorce attorney to protect your financial health. With the right legal strategy, you can end your marriage with the savings you need for the future.