When you have worked for decades and have contributed to retirement accounts that you have been planning to have as your support once you retire, it can be frustrating to know that those benefits may be divided between you and your spouse during your divorce. It is important to understand how the court will treat your retirement benefits, and how those benefits could end up being subject to distribution during the property division phase of your divorce. We will tell you more about how retirement benefits can be classified, and we will provide you with more information about situations where those benefits will and will not be divided in a Michigan divorce.
Equitable Distribution of Marital Assets
Under Michigan divorce law, all marital property-both assets and debts-are divided between the spouses based on the theory of equitable distribution. Marital property is not divided equally, but rather equitably, or fairly, between the parties. Michigan courts look to many different factors when deciding how marital property should be distributed, and how much each spouse should receive. Examples of those factors include the length of the marriage, the parties’ present and future earning capacities, the standard of living established during the marriage, and the health of the parties.
Marital property typically includes any assets acquired after the date of the marriage, unless those assets are expressly excluded through a prenuptial agreement, if those assets were acquired by gift or inheritance, or if those assets were acquired through the exchange of separate property. Generally speaking, any assets acquired prior to the date of the marriage will be classified as separate property and will not be subject to distribution.
When Will Retirement Benefits be Divided?
If retirement benefits are classified as marital assets, they will be divided according to the theory of equitable distribution. If you earned any portion of your retirement benefits after the date of the marriage and they are not excluded through a premarital agreement, they will generally be classified as marital property.
However, there are some circumstances in which retirement benefits will not be divided. First, a prenuptial or postnuptial agreement can exclude retirement benefits. Second, if you earned all retirement benefits in a particular account prior to the date of marriage, they will not be divided. Finally, although retirement benefits would be taken into account in a property settlement agreement, you may be able to keep all retirement benefits through a negotiated settlement with your spouse.
Seek Advice from a Michigan Divorce Lawyer
Retirement benefits can be a contentious issue when it comes to property division in a Michigan divorce. While it is important to understand that the court is required by law to divide marital assets according to a theory of equitable distribution, it may be possible to negotiate a property settlement agreement in which you can retain most or all of your retirement benefits. One of the experienced Michigan divorce lawyers at our firm can speak with you today about your options. Contact the Law Offices of Michael A. Robbins for more information about handling retirement assets in a Michigan divorce.