Real estate and real property are not the only major assets that come into play during property division in the dissolution of a marriage. Dividing pensions and retirement benefits in a Fairfield divorce can be a hotly contested subject, and there are multiple factors that go into an equitable assignment of both. For many families, a large portion of their wealth is held in retirement funds.
When dividing property in Connecticut, courts rely on the equitable distribution method, which entails a judge looking at the entirety of a couple’s estate and considering things like the length of the marriage, the reason for the divorce, and the specific needs of each partner, amongst other criteria, to determine a fair split. If you are involved in a high-asset divorce, you do not want to take any chances. Having a dedicated team of attorneys from Dolan Divorce Lawyers PLLC may increase your chances of retaining an equitable share of your retirement benefits and pensions.
There are three categories of retirement plans included when a court equitably divides property between two ex-partners: stock ownership plans, where a company contributes stock to an employee’s retirement account; pensions or defined benefit plans, which gives an employee a set monthly amount once they retire dependent on the length of employment; and defined contribution plans, which include things like IRAs, 401(k) and 401(b) plans, and profit sharing plans.
Retirement account valuation varies and may become more complex depending on the type of plan. Defined contribution plans are easier to assess because the account balance at the time of appraisal determines the value. Pensions require a more detailed calculation based on the length of employment, the employee’s age at retirement, and final salary.
Stock ownership plans use similar criteria and also factor in the value of publicly traded shares. An attorney with experience in retirement account division could assist with evaluating these assets and bringing in the necessary valuation experts during a Fairfield divorce.
Connecticut courts apply two primary methods to divide retirement benefits and pensions in a Fairfield divorce. The first is the present value method, which calculates the value of the pension at the time of property division, awards it to the account holder, and requires that person to reimburse the other spouse a specified amount. The second is the deferred distribution method, which uses a Qualified Domestic Relations Order (QDRO) prepared by an attorney and submitted to the court.
A QDRO assigns a designated portion of the retirement account or pension to the spouse who holds the account through their employer, while the remainder is distributed to the other spouse.
Equitable division of retirement accounts depends on the type of plan, whether a stock ownership plan, defined contribution plan, or defined benefit plan. In cases where both spouses are employed and earn comparable incomes, a court may assign each party their own respective IRA, 401(k), or 403(b). When retirement assets are combined or one spouse earns significantly more, the court may divide a single account into two separate accounts to provide an equitable share to the non-wage-earning spouse.
When retirement assets are involved in a divorce, especially one that is contentious, both parties should consider hiring a property division attorney who is experienced with dividing pensions and retirement benefits in a Fairfield divorce. Retirement accounts have many moving parts, and valuation can depend on several factors.
Connecticut courts have broad discretion when dividing assets in a divorce, which can create uncertainty during the process. Working with a knowledgeable divorce attorney could provide clarity and help you understand what to expect. The team at Dolan Divorce Lawyers PLLC offers focused guidance to help pursue a fair and equitable distribution of retirement assets. Call today to request a case review and speak with our legal team.
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