Will My Retirement Account Be Considered a Marital Asset in my Florida Divorce?
During your divorce, one of the most difficult tasks for you, may be having to part with some of your joint property. In Florida, your marital property is subject to equitable distribution. Equitable distribution is defined as the method in which Florida courts divide marital assets and debts, between the parties in an equitable and fair manner. As an equitable distribution state, Florida may consider a myriad of factors when determining fairness and equity in your property division. However, statute strictly provides, retirement plans are considered marital property and subject to division. Retirement accounts can be very valuable, therefore are highly contested. Talk with your Orlando Divorce Attorney to find out if you will be able to protect your retirement during the divorce process.
According to Florida Statute 61.075(6)(a)1e; the category of martial assets includes “All vested and nonvested benefits, rights, and funds accrued during the marriage in retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans and programs.” With that said, the court is unlikely to divide the full monetary value of the retirement account 50/50. In a marriage where the spouses were equally employed and have similar retirement plans, the courts can assign each party their respective plan and no further division is necessary. However, complications may arise when one party has a plan that is much more valuable. In this case, the court will implement a fraction system. “The numerator is the amount of time the employee was married while participating in the plan, and the denominator is the total time the employee has in the plan.” Trant v. Trant, 545 So. 2d 428, 429 (Fla. 2d DCA 1989). Therefore, the distribution of your retirement is based solely on the duration of the marriage in correlation to the time you were participating in the plan. It is critical to determine the exact date you or your spouse created the retirement plan and for how many months this participation occurred during your marriage.
This calculation system provides many benefits to protecting the value of the existing retirement funds. First, this calculation is based on the present value of the plan. Therefore, it will not take into account the appreciation value that may accrue after the divorce. Furthermore, this also removes the value you had gained prior to your marriage. The value that will be in question is only the amount that was acquired during the time of the marriage. This allows the recipient to continue to place funds into the account after divorce and further keep the funds placed into the account prior to marriage. Providing your Orlando Divorce Attorney with documentation of your pre-marital balances will help you to retain your individual property.
However, if this judicial calculation is not a desirable option for you, you can discuss with your spouse an exchange of other assets to equal the entitled amount. Because the court may not come up with this solution if left to make the decisions, talk with your Orlando Divorce Attorney to utilize the mediation process to come up with what both partners will look at as equitable before the courts divide it for you.
Finally, if ordered to divide portions of your retirement account, it is critical to consider the tax penalties that may occur if done improperly. It is inadvisable to cash out your retirement account to settle your divorce because you will then create individual debt that will have to be paid in the future. Talk with your Orlando Divorce Attorney about using a Qualified Domestic Relations Order (QDRO) to protect you from early withdrawal penalties during your divorce.
If you are facing the possibility of a divorce, retirement may not be the only issue that you need advice on. Contact an Orlando Divorce Attorney to ensure that your pre-marital assets are protected.
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