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Considerations when dividing your pension and 401K in divorce

So, you've been married for decades but neither of you is happy anymore. You find yourself thinking about divorce, but you also feel worried about what divorce could mean for your financial future or your retirement.

Whether you were the spouse who earned the most money in the marriage or you spent many of your prime professional years taking care of your family, it's natural to want a fair outcome to the division of your retirement assets.

People often get confused by the Colorado asset division laws. Contrary to popular misconception, Colorado is not a community property state. Instead, it is a marital property state, which is similar but different. Any assets or debts you acquired during the marriage become marital property subject to division by the courts. This will typically include your retirement accounts and pension as well.

Just because your name isn't on it doesn't mean it isn't partially yours

You do a lot of things in marriage that you don't necessarily get credit for. That is the nature of a spousal relationship. You provide support in many different senses of the word. From emotional support when your spouse struggles at work to physically providing them with the necessities of daily life, like hot food, clean clothes and a warm bed, you make it easier for your spouse to earn a good wage even if you aren't out developing your career at the same time.

When divorce is on the horizon, your spouse could suddenly forget how much time and effort you invested into your family and your plans for future stability. Just because the pension or retirement account is only in your spouse's name doesn't mean that they have sole ownership of it.

Even if they opened the account prior to marriage, the amounts that went into the account during the marriage are likely marital property. In other words, you should receive a portion of those funds or reasonable assets to offset the value of the account.

The courts could split up accounts or divide other assets

There is no one-size-fits-all solution for asset division in divorce, and the Colorado courts try to stay flexible with the solutions that they offer to families. For many people, simply dividing a retirement account could be the easiest approach. By issuing a Qualified Domestic Relations Order (QDRO), the courts can ensure that you get to divide your account without incurring any early withdrawal penalties or taxes.

Other times, if your spouse has a pension on the way, the courts could order that they pay you a portion of that pension as alimony once they begin to receive it. Finally, the courts could look at the total value of the retirement account or pension and choose to award you other assets that represent an equivalent or fair amount when compared to your portion of that account.

Talking about your assets and your family circumstances with a Colorado divorce attorney makes it easier for you to develop a strategy for a fair divorce outcome.

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Mary Kay Kramer, P.C.
1820 West Colorado Avenue
Colorado Springs, CO 80904

Phone: 719-362-5113
Phone: 719-475-9994
Fax: 719-447-9732
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