Saving for retirement is a conversation many couples discuss during their marriage in preparing for their future together. While the parties may have been on the same page when initially discussing how to save, their conversation may be different when going through any contentious divorce. In short, the answer is yes, your spouse may be entitled to a portion of any retirement accounts, including pensions, that are solely titled in your name. The fact that any retirement asset is titled solely in one’s name does not prevent any marital funds from being divided.
Nevertheless, only the “marital share” of any pension, profit-sharing or deferred compensation plan or retirement benefits, whether vested or nonvested, may be divided. Virginia Code 20-107.3(G)(1) defines “marital share” as “that portion of the total interest, the right to which was earned during the marriage and before the last separation of the parties, if at such time or thereafter at least one of the parties intended that the separation be permanent.” In short, only money that was contributed to the retirement plan starting on the date of marriage until the date of your separation may be divided. This is why is it important to keep copies of all retirement statements showing the values in the account on the date of your marriage and the date of your separation.
How much is my spouse entitled to receive? This question is more difficult. Unlike many states, where property is considered communal and divided equally upon any divorce, Virginia exercises principles of equitable distribution in determining how to divide marital property. The Court considers the following eleven (11) factors set forth in Virginia Code § 20-107.3(E) when considering how to divide marital property:
- The contributions, monetary and nonmonetary, of each party to the well-being of the family;
- The contributions, monetary and nonmonetary, of each party in the acquisition and care and maintenance of such marital property of the parties;
- The duration of the marriage;
- The ages and physical and mental condition of the parties;
- The circumstances and factors which contributed to the dissolution of the marriage, specifically including any ground for divorce under the provisions of subdivisions (1), (3) or (6) of § 20-91 or § 20-95;
- How and when specific items of such marital property were acquired;
- The debts and liabilities of each spouse, the basis for such debts and liabilities, and the property which may serve as security for such debts and liabilities;
- The liquid or nonliquid character of all marital property;
- The tax consequences to each party;
- The use or expenditure of marital property by either of the parties for a nonmarital separate purpose or the dissipation of such funds, when such was done in anticipation of divorce or separation or after the last separation of the parties; and
- Such other factors as the court deems necessary or appropriate to consider in order to arrive at a fair and equitable monetary award.
Additionally, the Court may not order the payment of retirement assets that is greater than fifty percent (50%) of the marital share of the cash benefits actually received by the party against whom such award is made. See Virginia Code § 20-107.3 (G)(1). However, the fact that the Court may only award a spouse at most fifty percent (50%) of retirement assets, does not prevent a party from agreeing to divide more than 50%. This may be a useful tool during settlement negotiations. An experienced attorney can work with you to consider various factors when dividing retirement, including time-value of money, tax consequences, your age, the length of time until any such assets may be received, etc.
Finally, when dividing retirement, one needs to consider whether a spouse shall be designated as the beneficiary for a portion or all of any survivor benefit plan or annuity. This is also an issue that should be addressed in any negotiations, include who is responsible for the monthly premiums for any survivor benefit plan.
Each case is different, and it is best to discuss your case with an experienced family law attorney that can guide you through the various options upon considering the specific facts and circumstances of your situation.
As this is a brief overview of dividing retirement benefits, please visit our website in the future for a more detailed description of different considerations when dividing these assets, including how to properly effectuate the transfer and division of retirement accounts and whether court orders are necessary for the division of your retirement assets.