A pension or retirement fund isn’t something that every divorce involves. If a couple marries young and divorces young, there may not be anything invested in any sort or retirement plan. If you’re older, however, it’s much more likely that pensions and retirement plans are likely to be a significant factor when you divide up the assets in divorce.
Here are a few of the key ideas to keep in mind about how dividing pensions and retirement funds work in Michigan:
— Michigan is not a community property state, so everything doesn’t have to be divided equally. Instead, the court aims for a fair division of assets. That can allow for some creativity, especially if you have assets to leverage against the pension or retirement fund, like equity in a home.
— Contributions added to the retirement fund or pension prior to marriage are generally considered that spouse’s separate property. However, contributions added to the retirement fund or pension after the marriage are generally considered marital property.
— You may need a qualified domestic relations order (QDRO) to divide the pension or retirement fund. The QDRO is how the plan’s administrator gets the instructions on how to pay the non-employee spouse’s share of the plan.
The QDRO should be completed and submitted to the pension plan’s administrator before the divorce is finalized to make sure that what it proposes to do with the funds (take a lump-sum payout, hold the payment in abeyance, and so on) is permissible under the fund’s rules. If not, that gives you time to renegotiate the division of assets.
— Don’t forget to take into account any problems that might arise from loans that you and your spouse might have taken against the plan in order to finance an operation, home repairs, or anything else. The responsibility for the loan has to be divided up as well and the loan may factor into the actual value of each spouse’s share of the funds.
For more information on what to consider when dividing up pension and retirement funds during a divorce, talk to a family law attorney today.
Source: FindLaw, “Michigan Compiled laws, Chapter 552. Divorce 552.101,” accessed Feb. 24, 2017
