The Division of Marital Property and the 401k Divorce Split
Welcome to the wildly exciting world of the Florida divorce process dealing with equitable distribution. Specifically, a Qualified Domestic Relations Order. In the division of marital property, this foreign term is often left out of the mainstream law divorce vocabulary. That is, if there is such a thing.
How Much Does it Cost to Get Divorced in Florida?
The legal formula for the division of marital property in Florida, including dividing retirement accounts, is equitable distribution. During any Florida divorce process, the state court looks at several accounts that make up a marital estate. Whatever a court deems to be marital property is divisible upon divorce. This umbrella covers vested and non-vested benefits rights, and funds accrued during the marriage such as:
- Retirement plans
- Pension plans
- Profit-sharing plans
- Annuity accounts
- Deferred compensation
- Insurance plans
For those pounding the pavement at a desk job long before heading down the aisle, take a deep breath. Benefits that accrued in these plans before marriage aren’t classified as marital assets during the Florida divorce process. Consequently, they generally remain separate property.
Don’t Attempt to Cut Corners by Focusing on How Much it Costs to Get Divorced in Florida, Pay Attention to Doing it Right the First Time Instead
In life, we are all faced with things that make you go hmmm. A retirement plan QDRO is a term most likely only known by those familiar with the context of the division of marital property. Much like this season’s Atlanta Falcons and Kimye’s baby name, confusion abounds among the average layperson. Yet, they are integral to know if a party wants to avoid future regret attributable to their divorce settlement.
A Qualified Domestic Relations Order creates or recognizes the right to receive a portion of a divorced 401k retirement account. As this can be the largest marital asset, the ability to pay a lump sum to satisfy the division is unlikely. As a result, a QDRO is necessary to receive money through deferred distribution once a party has retired.
Is a Qualified Domestic Relations Order Automatic for Dividing 401k Divorce Benefits During the Florida Divorce Process?
The short answer is no. A QDRO is a separate beast entirely. While a marital settlement agreement or final judgment may require a retirement account to be split, this language alone doesn’t cut it. The parties need to submit a completely separate document to the plan administrator to imitate the process. The mechanics of this can be complex to grasp due to the variation in benefit plans.
Perhaps the former love of your life is punching a time card at city hall. Municipal pensions aren’t subject to a QDRO. Or maybe he or she is on permanent couch duty as a result of a back injury from a tough assignment at a local construction site. A disability pension isn’t a marital asset for the purpose of the division of marital property. In these situations, a party will to need to get creative in order to get their hands on that scrilla.
Furthermore, there are details that may be omitted from a QDRO which cause a party to miss out on benefits or taxes. For example, survivor benefits. Consequently, this can have a big impact on the distribution of a 401k. In these situations, the cost to get divorced in Florida can increase exponentially by the time a party realizes they got the short end of the stick.
The Importance of Getting it Right when Dividing 401K Divorce Benefits
The goal of discovery is to find out the financial position of a party during the Florida divorce process. However, it’s not always wise to take the other party’s word for it when it comes to what they have financially. It’s smart to send to a spouse’s employer a survey to find out exactly what retirement accounts they have. This is especially useful in long-term marriages but is often overlooked. It’s helpful to know that a spouse can move 401k accounts to an IRA, but pension plans typically remain with the company until a party retires.
Wording of a Qualified Domestic Relations Order that spells out the division of marital property is extremely important. One of the most common mistakes is using general language. For example, ‘spouse x is entitled to 50% of the marital portion of y account.’ Plan administrators won’t calculate the division of benefits for you. Nor will they calculate contributions and earnings on the marital portion. The loss of 401k divorce value due to lack of thoroughness isn’t just lazy, it’s just plain dumb.
The Details of the Division of Marital Property During the Florida Divorce Process
Florida Statute 61.075 provides several factors a court must consider in the division of property as part of the Florida divorce process. This framework for a courts marital property distribution between spouses include:
- Contribution to the marriage by each spouse, including contributions to the care and education of the children and services as homemaker
- The economic circumstances of the parties
- Duration of the marriage
- Any interruption of personal careers or educational opportunities of either party
- Contribution of one spouse to the personal career or educational opportunity of the other spouse
- The desirability of retaining any asset in the case.
- Contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties
- Desirability of retaining the marital home as a residence for any dependent child of the marriage, or any other party, when it would be equitable to do so
- The intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition for dissolution of marriage or within 2 years prior
- Any other factors necessary to do equity and justice between the parties
Bottom Line: a Qualified Domestic Relations Order is an Important Part of the Florida Divorce Process
Like most aspects of the Florida divorce process, the division of marital property can be tedious. You don’t need Boca Raton lawyers to tell you that. For this reason, it is important you retain a Florida Family Law Attorney to fully advocate for your interests. If you apt to take another route, the answer to how much does it cost to get divorced in Florida will be a lot higher than you thought. The steps you take now to protect your retirement planning can determine your quality of life in your later years. In the words of Tupac, holler if ya hear me.
Click Boca Raton Divorce Attorney to schedule your consultation. Proudly Serving Boca Raton, Delray Beach, West Palm Beach, and all of Palm Beach County, South Florida.
Divorce Lawyer Boca Raton Practice Areas Include:
Florida Prenuptial Agreement
Post Marital Agreement
Simplified Dissolution of Marriage
High Net Worth Divorce
Florida Alimony Laws
Division Of Marital Property
Qualified Domestic Relations Order
Division of Property
Dissipation of Marital Assets
Modification of Alimony Payments
Florida Modification of Child Support
Modification Of Child Custody In Florida
Florida Child Support Enforcement