Divorce is the worst. It really is a shock to the system in a lot of ways. There is an enormous emotional toll that accompanies the end of your valued relationship. If you are a father and your family’s breadwinner, there is the uncertainty of what will happen with your children, whether you have the strength to guide them through this experience, and the prospect of seeing them a lot less than you ever have before.
Further, there is a financial toll. If you have traditionally been the primary source of income for your home, then you understand that you are about to spend a lot of money on attorneys fees, will have to split marital assets in half, and will likely have to pay alimony and child support. With these impending financial hits, you need to understand what happens to one of your biggest assets: your retirement funds. Specifically, can your wife touch your retirement when you separate and divorce?
Qualifying Retirement is Marital Property
North Carolina is an equitable distribution state, which means that a court will add up the fair market value of all marital property, and then divide it between the spouses in an equitable manner—weighing several statutory factors to do so. Martial property generally consists of all property acquired between the date of marriage and the date of separation.
Unfortunately, retirement plans are fair game during equitable distribution proceedings. However, the portion of the retirement plans that are marital property still must fall within the date of marriage and the date of separation. So if a retirement plan is started and entirely funded during the marriage, then the entire fund is marital property subject to distribution. However, if the retirement fund existed prior to the marriage, then only the prorated portion of retirement that has been funded during the marriage is subject to distribution.
Typically, once the calculation is complete, an award of pension or retirement funds can be paid to the receiving spouse by: (1) a lump sum payment; (2) periodic payments over time; or (3) substituting other assets of an equal value to leave the retirement accounts alone.
A Qualified Domestic Relations Order (QDRO)
For qualified retirement plans through your employer, a “Qualified Domestic Relations Order” (or QDRO) is a popular and effective way of effectuating an agreement or order regarding the distribution of retirement funds. A QDRO is an order that: (1) informs a retirement plan administrator of another person’s rights to receive from that retirement account; (2) spells out what that person is entitled to; and (3) orders the administrator to carry out the distribution of funds as described.
Contact New Direction Family Law
Equitable distribution proceedings are incredibly important to your financial future. You need a smart, effective attorney to help you properly classify and appraise property so that you receive an accurate and fair division of property and debt. Let New Direction Family Law represent you. Our legal team cares about our clients and always provides thoughtful representation. Our firm serves Wake, Johnston, Durham, and surrounding counties. Call New Direction Family Law today at (919) 719-3470 to schedule a consultation or visit us at our website.