Navigating the Complexities of Divorce and Pensions
You may believe that in a Florida divorce, what is yours, with your name on it, is not subject to division. But this is not necessarily the case.
Under Florida law, a pension, 401k, IRA, or profit-sharing plan you contributed during your marriage is subject to division. Simply put, it is a marital asset.
Florida law differs from other states, which divide marital assets in a 50/50 manner. In Florida, equitable distribution is the guideline for couples to follow when they divorce.
Ensuring a fair and equitable division of assets in your Florida divorce can be complex. To navigate this process successfully, it’s crucial to seek professional advice. Crystal Collins Spencer, a seasoned family law attorney, can provide the guidance and support you need, particularly if you and your spouse have significant assets.
Crystal Collins Spencer’s expertise and experience are invaluable during this challenging time. Her deep understanding of Florida’s divorce laws and her ability to advocate for her client’s best interests make her the ideal choice to represent you in your divorce proceedings.
Divorce and Pensions
In most divorces, homes, bank accounts, property, cars, and art are divided equitably, meaning the couple will negotiate the division if they agree. The division is predicated on several factors:
Some things to consider:
- How long they were married.
- Each individual’s economic circumstance
- Each person’s contribution to the marriage, including no-economic contributions.
- Each person’s debts, especially considering debt incurred by one individual.
A retirement or pension plan is divided into the same considerations. While a pension plan, or defined benefit plan, guarantees the employee a specific amount of money when they retire, the employer fully funds a defined benefit plan into a tax-deferred investment account.
Your attorney will draft a Qualified Domestic Relations Order (QDRO). This formal order establishes your ex’s right to receive monies from your retirement plan, which the administrator can execute.
Because the retirement plan was supplemented with marital assets earned during the marriage, it is subject to division, whether a 401K, a Roth or IRA, or any retirement plan from your employer.
Even if one spouse didn’t work, contributions to the marriage could be non-economic, such as child care. The pension would still be subject to division in that case.
Complexities of Dividing a Retirement Plan
In some cases, couples have a prenuptial agreement that keeps assets away from the divorcing spouse otherwise, the theory of equitable distribution applies.
Contributions Before Marriage – It’s essential for your family law attorney to understand what type of retirement plan you’ve been contributing to and for how long. Did the contributions begin before the marriage? In that case, only those assets contributed during the marriage are marital property and subject to division.
Lump Sum—If you do not seek a QDRO, you and your attorney may opt to pursue a lump sum payment at the time of the employee’s spouse’s retirement.
Substitute Assets—Another complexity is that some government pension plan administrators may not accept QDROs. Government pension plans are not subject to QDRO requirements and are not obligated to settle with a lump sum.
In that case, the parties would have to negotiate a substitute for the assets that can’t be divided. For example, if the wife is due $25,000 from the pension plan, she might instead seek a piece of property the couple owns.
Military Retirement Divorce— In a military spouse divorce, the non-service member cannot receive more than 50% of the retiree’s benefits. Calculating benefits in a military retirement account can become very complicated.
Your Florida Family Law Attorney
A general rule of thumb is the more assets you have, the more complicated the divorce can be. Things can become even more complex when one spouse is not transparent about what he owns or when he tries to transfer assets into a hidden account.
There are many factors to consider when dividing retirement plans during a Florida divorce. You do not want to find out the hard way that you missed information that would allow you to make an essential decision for your financial future.
Let Crystal Collins Spencer be your biggest ally during this difficult time. She handles family law matters in Pensacola and the surrounding Florida Panhandle. She can be reached to arrange a confidential consultation in her Pensacola office at 850-795- 4910.
