SPRINGFIELD, Mass. (Mass Appeal) – Retirement accounts are one of the most divided assets in any divorce proceeding. Attorney Dawn McDonald, from the Law Office of Cooley Shrair in Springfield, shared more about what happens to retirement funds in the event of a divorce.
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What Happens to Retirement Funds in a Divorce?
Retirement funds are generally placed into 2 categories in a divorce: Those that were acquired before the marriage and those that were acquired during the marriage. Retirement funds acquired during the marriage are subject to division as any other asset of the marriage. Retirement funds that were owned before the marriage are not generally subject to division in a divorce, however the growth of an account owned prior to divorce is treated as acquired during the marriage.
So this sounds a little confusing, can you give us an example?
Yes. Suppose that before you got married you had a retirement account that had $100,000 in it. Then you get married and you contribute an additional $100,000 over the course of your marriage. At the same time, the market does well and you earn interest of another $50,000. Now you decide to get a divorce. At the time of the divorce, the original $100,000 that you invested before you got married will not be subject to division as a marital asset, however the $150,000 that you contributed or earned in the account during the marriage, will be subject to division as a marital asset.
So how do the funds in a retirement account actually get divided in a divorce?
Retirement funds usually require a special court order to divide the asset. If the retirement fund requires this special order, the court will issue a Qualified Domestic Relations Order which we call a QDRO. This is usually prepared by the parties or a consultant hired by the parties in conjunction with the company managing the fund.
About Cooley Shrair:
Cooley, Shrair P.C., founded in 1946 by Judge Sidney M. Cooley and Attorney Edward B. Cooley, is a progressive law firm located in Springfield, MA. Cooley Shrair provides unequaled service to its clients. Our unparalleled response time to our clients’ needs is the foundation of our mission statement.
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