Will You Lose Your Retirement in Your Divorce?

A common question our family law attorneys receive from individuals considering or in the midst of divorce is: will I lose my retirement.

In this article, family law attorney Chris Sutton discusses what Colorado law says about how retirement money is handled during a divorce.

Questions About Your Retirement & Divorce?

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Divorce and the Distribution Of Retirement Accounts

Your income will probably be affected by your divorce if you have kids and were married long enough to owe or receive alimony. But what about the money you and your employer contributed to your retirement account? Or, what happens to Social Security funds that are coming to you?

Here are a few more of the most common questions our family law attorneys get about retirement income:

• • Will my retirement funds will be divided up during the divorce process?
  • Are my retirement funds considered separate property or marital property?

The real question is one of timing.

When was your retirement account opened? If the account predates the marriage, then that portion of the account you accumulated before you got married will be yours and yours alone.

But…Things Change as the Years of Your Marriage Pass

As you and your employer continue to contribute to your retirement account, obviously the value of the account continues to grow.

Any increase in value of that retirement fund over the course of your marriage will be subject to division.

Here’s an example: 

Let’s say you start out at the beginning of your marriage with a 401(k) worth $100,000. During the course of your marriage, your 401(k) doubles in value. Now it’s worth $200,000. That $100,000 increase will be considered marital property.

That means the court will expect the increased amount to be divided with your soon-to-be ex-spouse.

Division of Other Assets

This rule of division is also true for other assets.

Example of Home Purchase Pre-Marriage:

Let’s say you owned a house before you got married. Through the years, during which time you got married, the house increased in value.

Well, you are entitled to the value of your home at the time you purchased it. However, the court will expect any increase in the value of the house to be split with your spouse.

The same rule will likely apply to other assets you brought into the marriage that may have increased in value over time.

Questions About Asset Division & Divorce?

Asset division is complex in Colorado. Courts say assets should be divided equitably. But equitable does not mean equal.

If you are concerned about your assets – the ones you brought into the marriage and the ones you’ve accumulated while married – we can help you make sense of it all.

Our experienced Family Law Team can guide you through the divorce process.

Always a Initial Assessment

Call 303-688-0944 to schedule a meeting with a divorce attorney. If you prefer, click here to schedule online.