According to recent research, divorce is becoming increasingly common among couples above the age of 50. In 1990, less than one in 10 divorces involved an individual in that age group. Today, that figure has since risen to 1 in 4. As such, retirement accounts are now often just as significant as checking or savings accounts during the property division phase of a divorce.
Virginia couples with retirement accounts who plan on divorcing should contact a qualified family law attorney to ensure that their assets are handled properly.
Many suggest that the best way to divide retirement funds is through a Qualified Domestic Relations Order (QDRO), which is generally prepared by an attorney and submitted to the administrator of the account in question. A QDRO allows a portion of one spouse's retirement benefits to be allocated to their spouse, but also protects the owner from penalties and taxes caused by transferring the funds.
A QDRO stipulates whether the retirement account is to be divided based on a set amount or a percentage of its total. It also determines how any future loses or gains will be distributed between the two divorced spouses.
For instance, one party's account might be divided based on the ratio of the length of his or her marriage to the duration of his or her employment. If a QDRO is established before the account owner retires, his or her former spouse may accrue independent interest and collect benefits indefinitely. If he or she is named as a surviving beneficiary, benefits may still be collected even if the account-holding spouse passes away.
Divorce can be emotionally and mentally draining, especially if the separating couple has been married for several decades. By hiring an experienced Virginia attorney, divorcees can ensure that complicated matters such as property and asset division are handled by a professional with their best interests in mind.
Source: Wall Street Journal, "How to Split a 401(k) in a Divorce," Anne Tergesen, June 2, 2012