The division of assets and debts is part of any divorce. Deciding who will stay in the marital residence, for example, is often a contentious decision that must be made during a divorce. Another asset that often causes disputes during a divorce is a pension or retirement account. If you have a significant amount saved in a pension or retirement account, you may not want your spouse to get any of that in a divorce. As a Murfreesboro divorce attorney at Bennett, Michael & Hornsby explains, however, your spouse may be entitled to part of your pension or retirement account if you get divorced.
The Division of Assets in a Tennessee Divorce
Only marital assets are subject to division in a divorce. Separate property remains the property of the owner. Common examples of separate property include assets owned prior to the marriage or an inheritance received during the marriage. Be careful, however, because even separate property can become marital property if it is co-mingled during the marriage.
The State of Tennessee is an “equitable distribution” state when it comes to the division of assets in a divorce. This means that if the parties cannot reach an out of court settlement, a court must create an “equitable distribution” of marital assets. Contrary to what many people are led to believe, this does not mean that the court must divide the assets equally. Instead, it only requires an equitable or fair division of the marital assets. A judge may start with a 50-50 division of the marital assets; however, there are a number of factors that might result in an award that includes more or less than half of the assets.
Why Are Pensions and Retirement Plans Unique?
To change or transfer ownership of most assets, such as the marital residence, vehicles, or financial accounts, you will only need a certified copy of the final order of divorce from the court. Pension and retirement accounts, however, require something more. Federal law requires a Qualified Domestic Relations Order (QDRO) to be in place in order for an alternate payee to be added to the account if the employee benefit or pension plan is subject to the Employee Retirement Income Security Act (ERISA). Most private sector pension and retirement plans are subject to ERISA.
What Is a QDRO?
A QDRO is a court order granting one spouse a right to a portion of the retirement benefits of the other spouse that were earned through an employee retirement plan. The QDRO describes the accounts to be divided, the manner of division, and the name of the alternate or additional payee. The QDRO will be given to the pension/retirement plan administrator to ensure that the assets held in the plan are distributed according to the agreement of the parties or as directed by the court. The plan administrator will not disburse any funds from the account to anyone but the employee unless a QDRO is in place.
How Are Pension/Retirement Plans Divided?
You and your spouse can agree on the manner in which a pension/retirement account will be divided in your divorce or a court can decide for you. Again, if the court decides it will create an “equitable division” of the portion of the account that is marital property. For example, if you were contributing to the account for many years prior to your marriage the court will only consider the portion of the account that was earned after the marriage took place to be marital property. The portion you contributed to the account prior to your marriage would likely be considered separate property and, therefore, not subject to the division of assets in your divorce.
Contact a Murfreesboro Divorce Attorney
If you have additional questions about divorce in Tennessee, it is important that you consult with an experienced Murfreesboro divorce attorney to ensure that your rights are protected throughout the divorce process. Contact the team at Bennett, Michael & Hornsby as soon as possible by calling 615-898-1560 to schedule your free appointment.
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