Divorce can be a complex and emotionally challenging process, and one of the key aspects that often comes into play is the division of assets. For many people, retirement accounts and investments are key components of their asset profile.
Protecting your investments is likely a high priority as you head into the divorce process. The question that might remain is whether these retirement accounts and similar long-term investments are marital property subject to division during your divorce.
Understanding marital property
Marital property typically includes assets acquired during the course of the marriage. This may encompass real estate, bank accounts and other valuable assets. However, the classification of retirement accounts and investments as marital property hinges on various factors. Namely, it depends on whether you acquired them before or after marriage.
Contributions and joint efforts
The nature of contributions to these accounts also plays a crucial role. If both spouses actively contributed to the growth of the retirement accounts or investments, it is fair to treat them as marital property. The court may consider the joint efforts and financial contributions made by both parties during the marriage.
In some cases, couples may have a prenuptial agreement in place that explicitly outlines how assets. If retirement accounts and investments are part of the agreement, the terms will dictate the division of these assets in the event of a divorce. Such agreements can significantly influence the outcome of asset division.
Studies suggest that divorced people are 23% more likely to have no retirement savings compared to married couples. A lack of financial preparation prior to divorce may contribute heavily to this statistic, so it is important to plan accordingly when a separation is on the table.