The first instinct of many people facing divorce is to review their circumstances and try to predict the future. Unless you and your spouse signed a marital agreement previously, predicting what will happen in your divorce is quite difficult.
A lot is up to you as you negotiate a settlement or is left to the discretion of a judge when you litigate. Those with complex or high-value property often have particular assets that they want to protect or maintain in their divorce proceedings. For those nearing the age of retirement, their retirement savings will potentially be a top priority.
Will you need to share your retirement savings with your ex, or will you lose your contributions because an account is in their name?
Equitable distribution rules apply to most marital retirement contributions
Once you get married, you and your spouse share a household and have combined finances. The income that either of you earns belongs to the whole family, and the same is true for the property and assets that you accrue.
A retirement account in one spouse’s name could still be at least partially marital property. A judge trying to split your property in divorce proceedings will use the equitable distribution standard from Kentucky state law to settle any disagreement about your property.
If you or your ex added to a retirement account before you got married, those prior contributions will be separate property that you don’t share. However, the amounts added during your marriage, including those contributed by an employer, will likely be subject to division by the court or part of the negotiation for your property division settlement.
When divided properly, you don’t have to take a loss
While you may need to split your retirement savings with your ex or at least use their overall value to make other property division decisions fairer, you don’t have to worry about losing some of your retirement savings to early withdrawal fees and taxes. You can draft a qualified domestic relations order that allows you to divide the account without incurring any penalties or losing some of the account balance to taxes.
Addressing the most valuable property in your upcoming high-asset divorce will minimize the losses you incur when dividing property with your ex.