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Is your retirement fund at risk in your complex divorce?

On Behalf of | Nov 28, 2024 | High Asset Divorce |

Ending a marriage can be complicated, bringing numerous stressors and uncertainties. This situation is far from ideal. On top of everything you’re going through, you may find yourself in a position where your retirement fund is in question.

The prospect of losing future financial security can be distressing for anyone. To clarify what might happen to your retirement fund during a divorce, know that Kentucky is an equitable distribution state. Here’s a brief explanation of what that means for you.

Marital asset vs. non-marital asset: What does this mean for your retirement fund?

In a Kentucky divorce, the law recognizes two types of assets: marital and non-marital. This distinction is crucial for your retirement fund. Here’s why:

  • Marital assets: These are typically divided between spouses during divorce. Under Kentucky’s equitable distribution rule, retirement funds earned during the marriage are usually considered marital assets.
  • Non-marital assets: These belong solely to one spouse.
If most of the money in your retirement fund is both your and your ex-spouse’s contributions, then it will likely be subject to division during the divorce process. However, the court typically treats any part of the retirement fund you earned before marriage or after separation as your own personal property or a “non-marital asset.” This means it’s usually not subject to division in the divorce.

Dividing the contributions

When splitting your retirement fund, Kentucky courts don’t just cut it down the middle. They look at your unique situation. Did one of you put your career on hold to raise kids? Maybe one spouse contributed more to the retirement fund while the other paid for daily expenses.

The court considers these factors to ensure a fair division. They also consider others, such as the length of your marriage and each spouse’s earning potential. In some cases, they might even use other assets to balance things out.

Will you have enough? 

Ideally, you and your ex-spouse can negotiate a fair split of retirement funds. Your lawyers then draft this agreement for court approval. However, if cooperation is difficult, you may need to go to court. There, both parties present their arguments for division. In either case, legal professionals can provide guidance through this complex process, helping ensure you have enough for your future.