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Division of Retirement Assets In A Divorce

This is Eric Amat Y Leon, Partner with Burnham Law. We are here today to talk about issues involving the division of retirement assets in a divorce case.

Increasingly, retirement assets are the largest assets in a divorce case. There are a lot of issues to consider. It’s a very complicated area of law that not a lot of attorneys are very well-versed in. You have issues involving valuation, calculating marital portions. Survivor benefits are a huge issue to consider. There are offsets.

I’ll give you a couple of examples in cases that I have been a part of, to work through where the attorneys and even the judge have just really gotten things wrong and really highlight the benefit of having a quality professional in your corner.

One area is pensions. Pensions are probably more common in the public sector. There are still a couple of private pension plans out there. When we talk about a pension, we’re talking about a monthly annuity at retirement for life. Many attorneys value these pension interests.

For example, you might have someone who might get $1,000 a month when they retire, and an attorney might value this pension interest at, let’s say, $500,000. They go to court, and when it comes time to divide the interest, the judge simply says, “Okay, each party gets $250,000.” Well, it’s kind of a problem because when retirement hits, all you have to divide is $1,000 a month. And if you have an order that says one party is getting $250,000, but all you can tap into is $1,000 a month, how are you going to put that into practice?

Another example that I saw a couple years ago, which was fairly prejudicial, was one party had a retirement asset, a pension plan with a present value of $100,000, and also had a 401(k), also valued at $100,000. Attorneys think, “Okay, we’ll give one person the pension, and we’ll give the other one the 401(k), and each will get $100,000.” Well, they’re not quite the same.

If you have a 401(k), you can loan against it. You can take distributions. It’s a lot more dynamic than with a pension plan, which is nothing until the person hits retirement age and then starts getting a monthly annuity at retirement.

So, you have a lot of care when you’re offsetting retirement interests. Again, there’s not a lot of attorneys who are really well versed in pension law. For this and other strategies, please visit us at BurnhamLaw.com.

Thank you for watching. Make sure you subscribe. And for more information, go to BurnhamLaw.com.

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Heidi
Whitaker

Partner - Domestic Relations

Fort Collins

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