Are 401(k)s Marital Property?
If you are considering divorce, the odds are good that you have given extensive thought to how your assets and financial future will be impacted. Many people start off by thinking in broad strokes about who will get the house, but it’s also important to consider how retirement programs, social security pensions, and 401(k)s will be divided. You may think that contributions made individually to your 401(k) may be considered separate property, but you would be wrong. Any contributions made to your 401(k) over the course of your marriage will be treated as marital property and will be subject to equitable distribution.
Dividing 401(k)s in a Divorce
Florida is an equitable distribution state, which means that judges typically start with the assumption of a 50-50 split and then adjust the ratio based on a number of factors intended to ensure fairness. Only marital property, also known as community property, is subject to equitable distribution. Contributions made to a 401(k) over the course of the marriage are considered to be marital property, so your spouse may be entitled to a 50% share (more or less, depending on what the judge determines is equitable). However, this does not have to be the case. If you and your spouse have a prenuptial or postnuptial agreement that covers the division of marital assets or specifically the treatment of 401(k)s, this agreement is a legally binding contract and will dictate. Some couples even have terms in their prenuptial agreement stating that contributions made to their 401(k) accounts will be treated as separate property in the event of a divorce. If an agreement like this exists, then the 401(k) contributions will not be treated as community property. Additionally, it’s important to remember that a judge is only tasked with determining how property should be divided if the couple is not able to reach an agreement on their own. If you and your spouse each made similar contributions to your own 401(k) accounts, you may just choose to keep them separate. Additionally, you can work out your own agreement, allowing you to keep your 401(k) contributions in exchange for your spouse getting less debt or another asset to balance things out. The more property division matters that you are able to work out between the two of you, the more control you will both be able to retain over the process. It is also generally far more cost effective to mediate divorce issues such as asset distribution outside of the courtroom, so consider trying mediation before heading into the courtroom with expensive litigators and a judge that you don’t know.
Contact the Greater Orlando Family Law Firm to Schedule a Consultation
If you are considering divorce and are concerned about protecting your assets, you need a strong and compassionate legal advocate in your corner. Contact the experienced Orlando divorce attorneys at the Greater Orlando Family Law Firm today to schedule a consultation.