I have many conversations with clients about how marital retirement assets are valued and divided.
The law, for all intents and purposes, divides marital retirement assets at the date of marriage and then again at a valuation date during a Minnesota divorce action. The valuation date will not start until a petition for dissolution of marriage and a summons is served on the husband or wife. Without following through with the petition and summons, no divorce action will start and retirement assets will continue to accrue until that is done.
Minnesota divorce law | pre-marital retirement assets
Often times, with people that my office has met with, there will be retirement assets that have accrued prior to the date of marriage. For instance, if you were married in 1990 but you it started working in a company or had accrued retirement assets starting in 1980, you would have 10 years of non-marital retirement assets.
This is important because 10 years of retirement assets will have significant value. Furthermore, in Minnesota, there is case law which states “how” money that grew during that 10 year period would be valued for growth in the market over those ten years. The mathematical equation is complicated; however, people should be aware that their retirement assets will be valued differently if there are non-marital assets.
Minnesota divorce law | How are retirement divided by the law?
For the retirement assets – 401(k), 403(b), pension, stocks, bonds, or more other qualified retirement plan – that were accrued during marriage, they will need to be divided.
They’re also different laws on how the retirement assets will divided. They can be divided either by a Qualified Domestic Relations Orders (QDRO) or via a Domestic Relations Order (DRO). The laws are complicated on when a QDRO are DRO are required; however, you should be aware that you should speak with a qualified QDRO attorney about how to divide those marital retirement assets.
Retirement assets and the rest of the marital assets
People should also be aware of the fact that retirement assets will be divided similar to all other marital assets. This means that a car, equity in the house, cash savings accounts, checking accounts, investment accounts or any other accounts which have present value will be placed into what is often referred to as a “marital pot” along with retirement assets. The husband will receive close to 50% of what is or whatever is in that marital pot and the wife will receive 50% of what is in the marital pot.
The retirement assets, again, are simply cash equivalent assets that may be divided. Experienced attorneys know that if a retirement asset is very similar in a husband or a wife’s account, the attorneys will often negotiate to leave the retirement assets (that are comparable in value) in either the husband or wife name. This makes it much easier to divide retirement assets without the necessity of a QDRO or DRO. For example, if the husband has a $98,000 retirement asset and the wife has a $100,000 they are comparable and may not need to be divided by a QDRO.
In conclusion, people need to be aware of the many different facets of retirement assets: they can be non-marital or marital assets, they can be valued over time based on complicated mathematical equation, and people should also be aware of the fact that that retirement assets can be split or left in a person’s name regardless of how other marital assets are divided up.
For further information on division of retirement assets in a Minnesota divorce or Dakota County divorce please contact Joseph M Flanders at Flanders Law Firm LLC at 612 – 424 – 0398.
