Few assets are more personal or more important to your future than your retirement savings. Your account may represent years of contributions and also possibly employer-matching benefits that increase your cash reserves for after retirement.
The closer in age you are to retirement, the more concerned you may feel about the prospect of sharing what you have saved in that account with your spouse. Can your spouse try to claim a retirement account if it is solely in your name during a New Jersey divorce?
State law might allow a claim against some of the account’s balance
New Jersey utilizes an equitable distribution standard for property division purposes. The courts try to fairly divide all of your belongings and debts during the divorce. Any income that the spouses earn during the marriage is also subject to division. Unless you have a marital agreement protecting your retirement account, your spouse may have a right to expect some of its value in your divorce.
For you as the spouse with the retirement account, that means that the balance added to the account during the marriage is possibly subject to division. You may have to share some of your savings with your spouse. However, it is not always necessary for you to divide the actual retirement account.
The courts can simply consider the value of those marital contributions to the account when splitting up your other properties and debts. If you do have to divide the account itself, you can use a Qualified Domestic Relations Order (QDRO)that will prevent penalties and taxes from applying to the division of the account.
Can you protect your retirement accounts?
If retaining your entire retirement account is your primary goal in the divorce, then that should influence your strategy and approach to the process.
Those with very specific needs may want to try negotiating with their spouse for a collaborative divorce rather than litigating. Once you go to court, you no longer have control over the outcome. If you reach your own settlement, you can secure the specific assets that matter the most to you while making appropriate concessions and other areas.
Identifying your biggest priorities will make planning for a complex New Jersey divorce a little bit simpler.