Articles Tagged with Individual Retirement Account (IRA)

While each divorce case has its own unique set of facts, circumstances and complexities, there are certain core issues which may need to be addressed, namely (1) the custody and support of any children of the marriage; (2) the necessity, extent, duration and amount of any spousal support or alimony; (3) any contributions toward professional fees; and (4) the equitable distribution of marital assets and liabilities. This series of blog posts will focus on the last item, equitable distribution, and specifically, the distribution of retirement assets in divorce.

First, let me give a brief summary of what is meant by equitable distribution. Note that I use the term “equitable” and not “equal”. Under the applicable New Jersey Statute, NJSA 2A:34-23(h), it refers to the court’s authority “to effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired by them or either of them during the marriage”. While it is possible that certain assets may be divided equally, depending upon the nature of the asset and/or the duration of the marriage, NJSA 2A:34-23.1 lists a multitude of factors that a court must consider in order to determine the extent to which a distribution of property would be “equitable”. That statute also provides that there is a rebuttable presumption that each party made a substantial financial and non-financial contribution to the acquisition of income and property while the parties were married. Addressing these factors, the court is to make findings as to an asset’s eligibility or ineligibility, its valuation, and finally, its “equitable” distribution. In preparing their case, whether for settlement, discovery or for trial, the parties and their attorneys should go through the same sort of analysis in identifying which assets may be subject to equitable distribution, their values and how they should be divided between the parties. With certain qualifications, marital assets subject to equitable distribution are generally defined as those acquired between a date of marriage and the date the complaint for divorce is filed.

In years past for most “average” divorce cases, the principal and usually most valuable asset of the parties which was subject to equitable distribution was the marital home. Whether due to declining real estate values or equity positions, or the lack of affordability in home ownership, this is no longer as true today. In many cases now, retirement assets accumulated by the parties during the marriage are the most valuable. What is meant by a “retirement asset”? Generally this refers to monies, funds or benefits which the tax laws allow to be saved or accumulated “tax-deferred” to be used, accessed or paid at some future time, presumably when the person is retired from active employment. There are rules and limits as to what would qualify as a retirement asset. They may be funded individually or through one’s employment. This blog post will focus on retirement assets which have been funded individually.