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How is Retirement Divided in Divorce When Only Part of the Years Served Were During the Marriage

Retirement Divided in Divorce When Only Part of the Years Served

How is retirement divided in divorce when only part of the years served were covered by the duration of the marriage? This is a question of “marital property” and “separate property” and a recent Appeals Court case sheds some light on this issue.

For example, if the retirement in question was based upon 30 years of service and the marriage between the parties existed for 20 of those 30 years the retirement asset would generally be considered to be two-thirds marital property and one-third the separate property of the retirement account holder.

This is based on the “time rule” which basically takes the length of marriage divided by the total time of service upon which the retirement was based. In Kentucky, marital property is to be divided equally. If the balance in the retirement account in question was $600,000 the division would look something like this:

$200,000 (or 1/3 of the amount) is the separate property of the account holder
$400,000 (or 2/3 of the amount) is considered to be marital property

Therefore, the spouse of the retirement account holder would normally be awarded half of the marital property portion of the account’s value which in this case is $400,000.  Thus $200,000 would have to be added to the non-account holder’s marital property calculation.  The account holder in this example would retain $200,000 of the original balance, as well as their $200,000 share of half of the marital interest for a total of $400,000.

How was retirement divided in divorce when only part of the years served based upon the appellate case in question?  The spouse in the appellate case challenged this ruling based upon the percentage of contributions which were made to the account during the term of the marriage. The spouse’s argument claimed that 87% of the funds paid into the retirement account occurred during the marriage, and therefore the marital property interest in the account should also be 87%.

The appellate court rejected her argument in this case because the value of the retirement amount was based upon length of service and the average salary during the final year prior to retirement, and not the amount contributed.  This may have been different if the structure of the retirement asset had been different.  This is why it is important to work with our experienced divorce and family law attorneys.

How is retirement divided in divorce when only part of the years served occurred during the marriage? How is maintenance handled in this type of long term marriage? These questions are legally quite complex and it is best to seek the advice and counsel of the experienced Louisville divorce attorneys at Dodd & Dodd.

Our partners each have decades of service in Jefferson County Family Court. We invite you to read the reviews of our clients and the recommendations of the legal industry and contact us or call 502-584-1108 to schedule an appointment with one of our experienced attorneys.