It is often obvious when certain assets are subject to division during divorce. For example, there is typically little question that both spouses have an interest in the home where they live together. They also clearly have shared responsibility for credit card balances when they are both co-signers on an account.
However, some assets can be a bit more challenging to address. Certain resources might seem to be the separate property of one spouse, which can lead to disputes if the other tries to lay claim to those assets during a divorce. Those saving for retirement may start a 401(k) that they contribute to along with their employers. It is typical for only one spouse to make contributions to a 401(k) account. Can they preserve their retirement savings as separate property in an Indiana divorce?
Account information isn’t the main consideration
People frequently make assumptions about property division during divorce that don’t have a basis in current Indiana laws. People may understand that some assets are separate property that they can retain in a divorce and some assets are shared or marital property that they have to divide.
It is more difficult than people might expect to establish exactly which assets are shared and which ones are marital. Simply referring to account paperwork or ownership records isn’t sufficient. Most of the time, people need to look more closely at resources to see when they acquired them or added to their value.
If someone started a retirement account prior to getting married, early deposits might be their separate property. However, whatever they added after getting married was theoretically subject to division. It is possible to divide the marital estate without actually splitting a 401(k) after people calculate the marital portion of the account.
It is also possible to divide a 401(k) without triggering taxes and penalties that reduce the overall value of the account. Unless someone has written agreement with their spouse declaring their retirement savings as separate property, they likely need to find a way to divide their retirement savings when they divorce.
Learning more about the basic rules for property division proceedings may help people as they prepare for an upcoming Indiana divorce. Those who can identify which property is subject to division can use that information to negotiate with a spouse.