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Retirement plan and asset division rights during a divorce

On Behalf of | May 4, 2020 | Divorce

North Carolina couples dissolving a long-term marriage have specific rights when dividing the assets they accumulated together. Under the state’s equitable distribution laws, property acquired during a marriage belongs to both spouses. 

During a divorce, a judge may divide property and assets fairly between the two individuals. “Fairly,” however, may not refer to an equal split. Some property could trade for another piece of property, or one spouse may buy an asset from the other for its fair market value. 

When a couple cannot divide property between themselves, a judge may split things as he or she views as fair. Some assets, such as an employer-sponsored retirement plan, may have their own method of division. 

Dividing a retirement plan 

An individual may request a fair portion of his or her spouse’s retirement accounts. Even if a spouse did not work and contribute income to a fund, North Carolina’s laws view a nonworking spouse’s contribution to the household as valuable. 

By submitting a Qualified Domestic Relations Order to the divorce court, a judge may create an order for support payments from a spouse’s retirement plan. As reported by Forbes magazine, a QRDO could provide alimony or child support payments to an ex-spouse, a child or another dependent. 

Depending on the plan’s administrator, an individual may request a payout, such as through a percentage of the fund’s value or a lump sum of cash. A judge, however, must approve the request. A retirement plan does not automatically dissolve; a divorced spouse may continue working and contribute to it for his or her own future. 

Negotiating property division to benefit each spouse 

If a retirement fund will provide fair and regular support payments to an ex-spouse, the divorce decree must state that arrangement. A family court judge may then consider the payout’s value in assessing the division of the couple’s other property and assets. In many cases, negotiating the division of property and assets with each party’s legal team in advance may help avoid a lengthy divorce court procedure.