In many cases, the retirement benefits that someone is earning from their employer are one of their most significant assets. This retirement plan may be large enough that they won’t need additional savings. If that person is married, both they and their spouse may have been planning to use those benefits to retire in the future.
A divorce can make this process a bit more complicated. The spouse who isn’t working and earning the plan is often worried that they’re going to lose access to those benefits because they’re getting divorced before their ex has officially retired. But the truth is that there are steps you can take to divide the benefits in advance and secure access to them in the future.
Using a qualified domestic relations order
One way to do this is with a qualified domestic relations order (QDRO), which can be issued as part of the divorce. The court determines what percentage of the retirement benefits are considered a marital asset—generally, the portion earned during the marriage—and how they should be split between the individuals.
The length of the marriage is very important because a shorter marriage means a smaller percentage of the plan was actually earned during that relationship. Any benefits that were earned prior to the marriage, or that will be earned after the divorce, likely do not count. So the entire retirement benefits package may not be split 50-50, but it is still possible for both people to gain access to at least a portion of the funds.
If you’re going through a divorce and are worried about your financial future, be sure you know what legal steps to take.