Who Will Get the Retirement Benefits in the Divorce?

Getting divorced in Michigan, especially after a long-term marriage or when the parties are nearing retirement age, can raise financial concerns about the property settlement and division of marital property. In particular, if one or both parties have substantial retirement benefits, the prospect of dividing those benefits-or one party not having access to any retirement benefits at all-can be an anxiety-inducing idea. We want to discuss the division of marital property in Michigan and how you might anticipate your retirement benefits being divided in your divorce case.

Are the Retirement Benefits Marital Property?

When it comes to dividing retirement benefits in a Michigan divorce, the first question the court will need to consider is whether those retirement benefits should be classified as "marital property." Under Michigan divorce law, all property is classified either as marital property or separate/non-marital property. In general, marital property includes most assets or debts that were acquired after the date of the marriage (unless the parties expressly agreed to exclude specific property from a "marital property" classification in a prenuptial agreement). Accordingly, most retirement benefits will be classified, at least in part, as marital property.

In some situations, retirement benefits have aspects of both marital property and separate property because one of the spouses opened the retirement account prior to the marriage and began contributing to it prior to the marriage (but continued contributing to it during the marriage). For parties in this type of situation, the court typically will trace out what part of the retirement account should be classified as separate property (and not divided in the divorce) and what part of the retirement account should be classified as marital property (and thus divisible during the divorce).

Equitable Distribution of Retirement Benefits and Other Marital Property

Assuming that some or all of the retirement benefits in question are classified as marital property, they will be divided along with all other marital property according to a theory of equitable distribution. This means that the retirement benefits and other marital property will be divided in a manner that is fair to both parties, but that is not necessarily equal or 50-50. The court considers a number of different factors, including the specific circumstances of both particular parties, in determining what an equitable distribution of the marital property looks like.

In some cases, courts will award a retirement benefits from a 401k, pension or another qualified retirement account to both parties, using a Qualified Domestic Relations Order (QDRO) to transfer retirement benefits from one spouse's account to another spouse's account. In other situations, one of the parties might want a particular piece of marital property (such as a house), and the court could decide that it is equitable to award one spouse the house while awarding the other all of the retirement benefits, for example. If the parties are able to negotiate a property settlement concerning retirement benefits, that is also a possibility.

Seek Advice from a Divorce Attorney in Michigan

If you have questions about dividing retirement benefits in your divorce, a divorce attorney in Michigan can assist you. Contact the Law Offices of Michael A. Robbins today.