One of the most difficult aspects of ending a marriage is figuring out how to divide your assets. Almost universally I am asked why do I have to share my pension, 401(k) or other asset with my soon to be former spouse. To the person asking this question it appears to be “not fair” or something they find offensive. The account holder worked hard building their egg nest and they do not want to share.
Perhaps you diverted some of your earnings into a 401(k) or were required to put some of your earnings into a pension plan. You believe these funds belong to you and you alone. It is even harder to understand when the person who holds the account believes they have been “wronged” or the other person has no savings or accounts.
Sharing Your Account
New Jersey is a equitable distribution state, so New Jersey divorce courts divide your marital assets in an equitable manner, which means distribution between you and your spouse will be fair but not necessarily equal.
If you have a variety of retirement plans, you will need to know which federal law pertains to the distribution. Failure to correctly categorize your retirement assets could lead to not only complications in the divorce, but also tax consequences. There may be both employer-based and private funds. Retirement accounts include 401K plans, IRAs, Roth IRAs, pensions, and trusts that mature at retirement age, typically age 65 years. You will need statements for each account for both parties that are current.
Workplace Retirement Plans
If your soon-to-be ex has a workplace retirement plan and you are entitled to a piece, the only way to legally access your share is through what's called a qualified domestic relations order, or QDRO. This is the case whether it's a 401(k) plan or traditional pension plan.
A QDRO is separate from a divorce agreement, although it is based on the contents of that decree. Because these court orders are a specialized legal area, make sure the attorney who drafts it has some expertise.
Working It Out Together
It is not easy realizing that your retirement funds are now going to be shared with your soon to be former spouse. The good news is that there are more alternative methods to reach a settlement than ever. It used to be that most divorces were handled exclusively by lawyers who haggled over only one or two assets. Now more couples are using mediators to hammer out settlements for far less money.
If you are more interested in “A Kinder Approach To Life's Legal Issues” I encourage you to contact me at 201.664.8566 for a free half-hour consultation. I also invite you to explore
vantassellaw.com to learn more about alternative dispute resolutions, that are kinder, easier, less costly alternative ways to divorce including meditation and collaborative process. These are family-friendly processes of negotiation that strive for a win-win resolution.
Working together in an atmosphere of respect and dignity, we will craft a mutually satisfying outcome for both you and your spouse in an informal though structured setting at your pace, with your privacy insured. If necessary, I will refer you to educational programs, financial planners, accountants, real estate agents or therapists who will help you build your future and create your new family dynamic.