When many couples plan for their retirement, they do so together. For instance, perhaps one spouse became a stay-at-home parent when they decided to have children. The other spouse has a lucrative job and is earning significant retirement benefits, so their plan is simply to use those benefits together when the working spouse retires.
But after the children move out of the house, the parents decide that they are going to get a divorce. Does this mean that the previous stay-at-home parent will lose all access to those retirement benefits? This could be very problematic, especially if they are close to retirement age and have no realistic time to save up on their own.
Qualified domestic relations orders
The good news is that retirement benefits can often be divided in a divorce, just like any other asset that was earned during the marriage. Benefits earned after the divorce or prior to the marriage do not qualify, but the percentage that was earned during the marriage can be split between both parties.
To do this, a couple often has to use a Qualified Domestic Relations Order (QDRO). Considering the length of the marriage, when the benefits were earned and other aspects regarding the couple’s assets and income, the court can determine what percentage of benefits should go to each person. Even if the working spouse has not retired yet, when they do, the QDRO will stipulate how those benefits are divided.
Dividing assets
This is just one of the ways that asset division can become complicated. If you are getting a divorce, make sure you know about all of your rights and legal options.