Going through a divorce can bring many financial challenges, especially when it comes to dividing assets like retirement accounts. Understanding how Tennessee law treats these is essential to protecting your future and ensuring a fair outcome. Retirement accounts involve complex legal and financial rules, so it is always recommended to consult an experienced divorce attorney to help ensure that all assets are properly divided according to state law.
Divorce and the Equitable Division Law in Tennessee
Tennessee follows the equitable distribution law, which means the court seeks a division of assets that it considers fair under the circumstances of the divorce. Many people assume this means a fifty-fifty split, but “equitable” does not mean “equal.” Instead, the family court judge considers several factors, such as the length of the marriage, each spouse’s earning capacity, financial contributions, age, health, and future needs to decide how assets will be divided.
In some cases, a fair division might indeed be fifty percent for each spouse; in others, one spouse may receive a greater share of the marital property if the court finds that this better reflects each person’s financial situation or contributions. As the court consider all relevant factors, it is critical to work with a lawyer who understands the financial aspects of divorce and can advocate strongly on your behalf.
Marital Versus Separate Property
Before any division of assets can take place, the court must first determine which assets are marital property and which are separate property. This is because only marital property is subject to division. Generally, marital property includes any assets or debts acquired by either spouse during the marriage. These assets can include retirement accounts, pensions, or 401(k)s.
Separate property, on the other hand, includes assets owned by one spouse pre- marriage, as well as gifts or inheritances received individually and kept separate. However, if separate assets are comingled (mixed with marital property) they may lose their separate property status. In addition, a valid premarital agreement can dictate how property and retirement assets will be divided in the event of a divorce, allowing spouses to protect certain assets and clarify what will remain as separate.
How Retirement Accounts are Split During a Tennessee Divorce
Retirement accounts can be considered as marital property and it does not matter whose name the retirement account is in. Retirement accounts can be especially complicated to determine because they may include funds accumulated before and during the marriage. In these situations, the portion of the account that was earned during the marriage is only considered marital property and subject to division. Any growth or investment earnings on that marital portion are also included in the division. If a retirement plan existed before the marriage, only the portion earned during the duration of the marriage would be subject to division. The part accumulated before marriage would remain the separate property of the original account holder.
The Role of a QDRO
To divide retirement accounts like 401(k)s or pensions, a specific court order known as a Qualified Domestic Relations Order (QDRO) is required. A QDRO instructs the retirement plan administrator how to split the account according to the divorce judgment. The QDRO is essential because it allows the division to take place without triggering early withdrawal penalties or unnecessary taxes. Without a valid QDRO, a spouse could face significant financial penalties if retirement funds are withdrawn or transferred improperly.
The Importance of Having a Tennessee Divorce Attorney
If you are facing divorce and have assets to divide, don’t navigate this process alone. Matters involving retirement accounts, pensions, and other financial assets require skill, precision, and experience. Even a small mistake in valuation or documentation can result in serious financial consequences later.
Working with a qualified lawyer at J. Ryan Johnson Law can make a major difference in protecting your long-term financial security. From drafting and filing a QDRO to negotiating the overall property settlement, our Nashville legal team ensures the process is handled correctly and fairly. We understand complexities of equitable distribution and can help you safeguard your financial future. Contact us today!
