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Colorado Family Law

Retirement accounts and pensions get split in Colorado divorce

Couples with a high net worth or annual income often face unique challenges during divorce. In many divorces, deciding how to split up the marital assets is a major sticking point between spouses. The more assets you have, the more likely it is you are going to disagree about significant issues.

Whether you worry about your ex hiding valuable assets or want to keep your vacation home, you probably have some serious concerns about what will happen when the courts divide your assets.

Retirement accounts are often a major source of contention, as they may be some of the largest assets you have acquired during marriage. Understanding what will likely happen to your retirement accounts can help you plan for your divorce and make financial decisions for retirement after ending your marriage.

For most couples, retirement funds will get split in divorce

The Colorado family courts try their hardest to split assets fairly between spouses in contentious divorces. Unless you and your ex agree to terms through mediation or have a prenuptial agreement that guides asset division, the courts will have the final say in who gets what.

When it comes to splitting up your possessions and debts, it is more important when you acquired them then whose name is on the account or receipt. Typically, any income during the marriage is marital property. Assets obtained with marital income become marital property. Deposits into your retirement fund, including employer matching amounts, will typically constitute marital property. Amounts deposited or accrued prior to marriage may be exempt from division.

Even a pension sponsored by your employer could end up divided in a divorce. Even though one spouse never contributed to the account, if that money accrued during the marriage, it is likely subject to division.

There are many ways for courts to handle pensions and retirement funds

Every person has their own unique financial situation and economic potential. The courts will consider the career trajectory of both you and your spouse when determining how to split up your assets in a Colorado divorce. When it comes to dividing your retirement accounts or pensions, they will have many options on how to handle that process.

The simplest way is often to create a Qualified Domestic Relations Order (QDRO) that orders the division of the account. Usually this order includes the name and personal information of the spouse not on the original account, along with a percentage to be transferred into the new account. In lieu of dividing the retirement account, the courts could also award other assets, such as equity in the marital home, to the spouse who does not hold the account.

It may be possible for you and your spouse to ask the courts to handle the accounts in a certain manner, but there is no guarantee that the courts will comply with your request. In all likelihood, you will have to anticipate splitting the retirement accounts and having less than you initially planned on for your retirement. However, you will have time in the future to rebuild that retirement nest egg and offset the amount you lose in the divorce.

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Denver, CO 80209

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