Your Rights to Retirement Assets
When a marriage is dissolved in the state of Kentucky, the division of property is one of the most important steps. This includes any marital assets, such as retirement plans and pension benefits. But how are retirement assets divided?
It is important for individuals going through a divorce in Kentucky to understand how their retirement funds factor into asset division so that they can ensure fair division and protect themselves from unexpected taxes or penalties down the road.
At Evan Taylor Law Office PSC, our family law attorney in Owensboro, Kentucky, can explain your rights to retirement assets in your divorce and help you make informed decisions about your own financial future after ending your marriage. We also represent people in divorce proceedings in Hancock County, McLean County, Ohio County, and Henderson.
Division of Property in Kentucky
In the state of Kentucky, marital property is divided in accordance with a separate property system. This means that both parties are considered to own their own separate property, and any assets acquired during the marriage are divided upon divorce based on a number of factors.
The court will first decide which assets are separate (owned by one party prior to the marriage or gifted or inherited by one party during the marriage). Any remainder is then considered shared marital property and subject to division.
In making its determination as to how to divide marital property, the court may consider a variety of factors, such as:
each spouse’s age, physical health, and earning ability;
contribution to the acquisition of assets;
contributions as a homemaker;
economic circumstances at the time of separation and/or divorce; and
duration of the marriage.
Generally speaking, all real estate, cars, and other personal items bought for use during the marriage are considered marital property regardless of who purchased them or whose name is on the title or deed.
How Retirement Assets Factor In
As mentioned earlier, marital assets are any assets acquired by the couple during their marriage. Retirement funds are also considered marital assets if they were earned or acquired after the date of marriage.
When it comes to dividing retirement accounts in Kentucky divorce cases, there are several factors that come into play. The court must determine whether the account was acquired prior to the marriage or during the marriage. If it was acquired before the marriage, then it is not considered a marital asset and will not be divided between spouses. On the other hand, if it was acquired during the marriage, then it is considered a marital asset and will be subject to division during divorce proceedings.
In other words, any funds that were earned before the date of marriage would generally not be considered marital property and will remain with the original owner upon dissolution of the marriage.
Qualified Domestic Relations Order (QDRO)
In order for a court to divide marital retirement assets between former spouses in Kentucky, it must issue a Qualified Domestic Relations Order (QDRO). A QDRO is an official court document that sets out each party’s rights regarding the distribution of funds from qualified plans such as 401(k)s and IRAs (Individual Retirement Accounts).
The QDRO must be created by an experienced family law attorney who understands all applicable laws relating to retirement accounts and distributions in order for it to be valid and enforceable by both parties involved.
Tax Considerations
When splitting up retirement funds during a divorce settlement in Kentucky, it is important to consider tax implications. Depending on how you divide your retirement funds, you may be subject to taxes or penalties imposed by the IRS (Internal Revenue Service). That’s why it’s crucial for each party to contact an experienced attorney who can provide guidance on how best to handle these issues so that both individuals are protected from unexpected tax liabilities down the road.
Don’t Risk Your Future. Contact Us.
When dealing with property division involving retirement accounts, there are many complex issues that need to be taken into consideration before any decisions can be made about how these assets should be divided between spouses. Our family law attorney at Evan Taylor Law Office PSC can help you understand your rights to retirement assets in your particular case. Contact our office today to schedule a case evaluation.