To say that divorce has a profound impact on all areas of your life would be a significant understatement. While most people are well aware that they will need to make decisions regarding their home, children and bank accounts, often they do not give a great deal of thought to how this change will impact their retirement and estate plans.
401(k) and IRA accounts
Any money in a retirement account earned during the marriage is considered part of the marital property. As with other marital property, these accounts will be allocated accordingly or in some cases, awarded to one spouse as part of the property division proceedings. If one spouse started saving for retirement prior to marriage, this amount is also part of the marital estate, and a judge would need to decide whether to award it to the spouse who accumulated it “off the top” or to divide it equally.
When the retirement account is marital property, the spouse who is participating in the plan has two options. They can either buy out the non-participating spouse or give them their share of the benefits. Because of this, a pension plan often needs to be valued to determine which is the best option for the situation.
Social Security benefits
If you were married for ten or more years before the divorce occurred, you are eligible for social security benefits based on your ex-spouse’s work record, assuming the benefits from your own work record are a lesser amount. These benefits can be claimed as long as you remain single, even if your ex remarries. As a divorced spouse, your retirement benefits will be 50 percent of your ex’s full social security benefits, assuming you start receiving payments at age 62 or older. It is important to point out that if you choose to work while receiving benefits, there are limits regarding how much income you can earn from your employment.
Retirement benefits aside, the division of property in a divorce can be a very complicated matter. Because of this, it is crucial to work with a family law attorney who is able to help you obtain all the assets you are due. If you or a loved one is considering divorce, contact the compassionate Menomonee Falls family law experts at McLario, Helm, Bertling & Spiegel.