When you choose to end your marriage through divorce, there are usually financial repercussions to that decision. Typically, you will have to divide income and debts accumulated during your marriage with your spouse. That can mean losing out on half of your assets, including equity in your home and funds in your retirement account.
However, since every marriage is unique, every divorce is also unique from other divorces. That means that it can be very difficult to predict exactly how the courts will handle the process of asset division if you do not have a prenuptial agreement. Unless there is an agreement between you and your spouse, the courts will make these important decisions on your behalf.
The closer you and your spouse are to retirement age, the more nerve-wracking that lack of knowledge may become. After all, it takes a lot of planning and saving to ensure a financially secure retirement.
Minnesota courts strive for equitable division of assets
The standard that Minnesota courts use for splitting up marital assets in a divorce is equitable distribution. In other words, Minnesota judges must do their best to split the assets and debts you accumulated during your marriage in a manner that is fair to both you and your spouse if you can’t come to an agreement about how to split them up yourselves.
Equitable does not inherently mean even. Instead, it is a standard of fairness based on many factors, including the contributions of each spouse to the marriage and the duration of the marriage. They will also look at the lifestyle you’ve known during marriage. The courts will also consider if there is any child support or spousal support ordered in your divorce when splitting your possessions and debts.
In most cases, retirement accounts and pensions get split by the courts
When the courts work on asset division, they care less about whose name is on an account and more about when deposits got made. Funds accrued during your marriage, including employer matching amounts, are typically part of the marital property.
Even pensions, which are typically a benefit of your employment at a particular business, can get split. If your pension is not currently in disbursement, the courts may choose to offset its overall value with other assets allocated to your spouse. Alternatively, they could request that the pension itself is split or that you pay spousal support once the pension becomes active.
Retirement accounts will also usually end up divided. While that means you will have less to retire on than you planned, you shouldn’t stay married just to protect your retirement. Instead, you should plan carefully and do your best to rebuild those retirement assets as soon as possible.