If you are going through a divorce and have retirement assets, you may be concerned about what will happen to them in the future. The truth is that your spouse may have a claim to at least a portion of those assets, so it’s smart to look at ways you can protect them.
New York is an equitable distribution state, which is good and bad news. In an equitable distribution state, there is no presumption that each spouse will receive 50% of their marital assets. Instead, the idea is that they should be willing to separate their assets equitably.
What’s equitable is not always equal
What is equitable in your relationship doesn’t necessarily line up with what would be equal, so that’s something to keep in mind. For example, if your spouse stays home while you work, you might argue that they shouldn’t be able to claim a portion of your retirement. However, if they were supporting you by watching your children at home, then they may argue that it’s fair if they take a portion of those benefits.
While you won’t necessarily need to divide your assets equally, you will potentially have to divide your retirement in some way unless you exchange another asset for your spouse’s share, have a prenuptial or postnuptial agreement that protects your retirement or can show that the retirement was earned before your marriage.
If your spouse is entitled to your retirement, or at least a portion of it, then you may need to look into a Qualified Domestic Relations Order, which allows a portion of your retirement to be paid out to your spouse following your divorce. This transfer might happen right away after your divorce and can typically be done without the 10% tax penalty that the Internal Revenue Service normally charges on funds withdrawn early from an IRA.
You have an opportunity to protect your retirement assets
While it is reasonable to share your retirement in some cases, it may not be something you want to do. There are methods of protecting your retirement assets that you should consider if you’re going through a divorce. Getting more legal information can help you make the right decision for your circumstances.