Going through the Michigan divorce process is not easy, but dissolving a long-term marriage introduces numerous challenges that parties may not expect. A so-called “gray divorce” encompasses the typical questions that you must address at any age, such as property division and spousal support. However, retirement is a key factor when spouses have been married for many years. Michigan’s equitable distribution statute provides that marital assets are to be divided according to the interests of fairness, but the unique nature of retirement can lead to considerable confusion and disputes in a gray divorce.
If you are a party to a divorce case, it is critical to understand your rights with respect to retirement and other assets you accumulated over a long-term marriage. A Michigan gray divorce lawyer can advise you on the laws and assist with options for resolving property division issues. In addition, an overview on retirement in gray divorce may be informative.
Gray Divorce and Retirement
When older individuals are ending a long-term marriage, there are a few points to keep in mind on how retirement impacts two aspects of the divorce process:
- Property Division: Retirement will usually be considered marital property and subject to equitable distribution between the spouses. This is true even when an account is titled in the name of one party or for nontransferable plans connected to employment.
- Spousal Support: Some of the factors the court reviews when awarding alimony to a financially dependent spouse include age, the length of the marriage, and the ability to be self-supporting. A judge will also look at how marital assets were divided between the parties, including retirement benefits.
Two households are more expensive to maintain, so one or both parties may have to put off retirement, make budgetary changes, or reduce costs in other areas.
Options for Handling Retirement in Gray Divorce
You can take advantage of the same strategies with retirement as you do in dealing with other issues in divorce. Michigan law encourages the parties to agree on property division and spousal support, and mediation is an option to get you closer to compromise on retirement plans. Outstanding disputes must go to a contested hearing, in which a judge will decide retirement issues.
Whenever retirement is an issue in divorce, you should keep in mind:
- Parties must address how division of retirement plans impacts taxes after making changes to ownership. Errors could lead to higher tax liability or penalties.
- A qualified domestic relations order (QDRO) may be necessary for dividing a retirement plan in divorce. When there is a QDRO in place, the former non-participating spouse receives payments just as if he or she was named participant.
Consult With a Michigan Divorce Attorney About Retirement in Gray Divorce
This summary of Michigan divorce laws helps you understand the basics regarding retirement, but you will need an experienced lawyer to guide you through the legal process. For more information on the issues that may arise in a gray divorce, please contact the Law Offices of Michael A. Robbins. We can set up a consultation to review your circumstances and discuss options for handling retirement benefits.