When you consider property distribution during your divorce, you are likely focused on assets like your home, bank accounts, and vehicles. An often overlooked, but important consideration, is how your retirement accounts will be split. Your spouse may be awarded part of your retirement benefits during your divorce, depending on the circumstances. For more information and to secure skilled representation, contact a Sparta property distribution attorney today.
Are Retirement Savings Considered Marital Property?
Yes, in New Jersey, retirement accounts are considered marital property to the extent that they were earned or contributed during the marriage. As with any other asset, money or value that was accumulated after the couple was legally wed is considered jointly owned, and each party has a claim to it.
Some portions of a retirement account will not be subject to distribution, however. Assets acquired before the marriage are considered separate property, meaning that contributions made to retirement savings before the marriage could remain separate and avoid equitable distribution.
However, it is important to note that if separate retirement funds are commingled with marital funds, they may lose their separate status. For example, if one spouse rolls their pre-marital IRA into a joint account, it will likely be considered marital property.
Will My Spouse Receive My Retirement Benefits During a Divorce in NJ?
It is possible, and even likely, that your spouse will receive a portion of your retirement benefits during your divorce. As established, retirement accounts and any value that was created during the course of the relationship are considered marital property and are therefore subject to equitable distribution. 401(k)s, IRAs, pensions, government retirement benefits, and even military retirement pay can be split during a divorce.
How Are Retirement Savings Divided?
To determine how retirement savings will be divided during a divorce, courts will first calculate which portion is considered marital property. Next, a variety of factors must be examined to determine each spouse’s needs and contributions to the marriage to figure out an equitable split of assets and liabilities.
Courts will consider the following factors.
- The duration of the marriage
- The age and physical and emotional health of each spouse
- The income or property brought to the marriage by each party
- The standard of living established during the marriage
- Any written agreement made by the parties before or during the marriage concerning property distribution
- The economic circumstances of each party
- The income and earning capacity of each party
- The contribution by each party to the education, training, or earning power of the other
- The contribution of each party to the amount or value of the marital property, or the property acquired during the marriage, as well as the contribution of a party as a homemaker
- The tax consequences of the proposed distribution to each party
- The value of the property
- The need of a parent who has physical custody of a child to own or occupy the marital residence or the residence shared by the partners
- The debts and liabilities of the parties
- The need for the creation of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse or children
- The extent to which a party deferred achieving their career goals
- Any other factors which the court may deem relevant
Courts examine nearly every aspect of the couple’s life to determine a fair division of assets based on their needs, contributions to the marriage, and earning capacity.