One of the first concerns people voice when they start discussing the practical consequences of divorce is what property they may lose or need to divide with their spouse. Real property and financial assets are often the resources that demand particular attention as someone prepares for divorce.
Retirement savings, specifically, can be a source of concern. Spouses likely budget for how much to save based on what it would cost to manage a combined household, and oftentimes, only one spouse has their own retirement savings account that both intend to share. There could be strong feelings from both spouses about what to do with those retirement savings, as a result.
Couples can reach their own arrangements
The good news for those worried about splitting their retirement accounts when they divorce in Michigan is that the law does not demand the division of retirement resources. Instead, Michigan’s law requires an equitable or fair division of marital property. The rules do not mandate the division of specific assets but instead focus on a fair outcome.
Couples have the option of negotiating their own settlements, which can benefit them by giving them control over specific assets. For example, one spouse could keep the vacation home while the other keeps the retirement account. Other times, spouses could agree to divide the retirement savings in a very specific manner.
When a judge orders the division of a retirement account, they will typically allocate a percentage of the savings to each spouse. If the account will actually end up split into two accounts, one of the lawyers will have to draft a qualified domestic relations order (QDRO). When properly drafted, approved and filed, a QDRO allows for the division of retirement accounts without penalties or taxes.
High-asset divorces often require careful planning
The more resources spouses share during their Michigan marriages, the more they need to consider when preparing for a divorce. Retirement accounts and real property are among the assets that are likely to cause disagreements and become focal points of divorce negotiations.
Learning more about how the Michigan family courts handle retirement accounts and other valuable marital property can help those who are preparing for divorce proceedings or negotiations with their ex alongside an experienced legal professional.