In New Jersey, a divorcing couple is required to divide their jointly acquired marital assets and debts, and, for the most part, to divide them evenly. This includes assets —such as pension plans and 401k’s that one or both of the parties will receive upon retirement or the other party’s death. New Jersey is an “equitable distribution” jurisdiction, which means a couple’s assets should be distributed equitably, even if not dollar-for-dollar equally. Which assets are subject to being divided depends upon how long the couple was married, what assets and debts each brought to the marriage, what assets and debts they acquired while they were married, and how they each will (or will not) be able to maintain the former marital lifestyle following the divorce. This can be a long, complicated, and grueling process, may require a good deal of financial and expert-based legwork, and certainly requires the assistance of experienced and effective matrimonial law counsel for each of the parties, along with financial planners, tax advisers, and possibly a mediator and/or an arbitrator.  “It takes a village” to get people divorced sometimes, yet that approach is almost always superior to an all-out court battle.

Pensions, 401k’s, and other retirement assets usually require more intensive investigation, because they are somewhat mysterious, less obvious to value, and often require specialized documents to divide up.  If either spouse has a pension plan available through an employer, it is essential that your attorney begin the process of information gathering early on.  In our office, we have a close working relationship with actuarial firms who specialize in appraising and dividing these assets, and advising the parties on the optimal methods of protecting each party’s rights.

As a beneficiary of your spouse’s retirement plan, you have to right to:

• Request an SPD (Summary of Plan Description) from the administrator, usually the employer;
• Request plan details — as a beneficiary you have the right to see what benefits you are entitled to, including death benefits or survivor annuities;
• Understand your spouse’s benefits — you have the right to know what benefits your spouse will receive and how it is distributed.

Each spouse may be entitled to surviving spouse status in the other’s pension plan, which will reduce the monthly benefits upon retirement, but assure the surviving spouse continues to receive full benefits after the death of the other. The parties also have the ability to “horse trade”, so that a party who wants to leave his or her pension plan completely intact could trade off, on an after-tax basis, his or her share in the former marital home upon its sale, or for other assets in the marital pot, against half the value of the intact pension.  This process calls upon the best, most cooperative, and most creative angels of the parties’ natures.

Retirement assets often are among the most highly valued in the marital estate, and certainly are laden with emotion based upon years of individual and joint sacrifice and hard work.  A CPA, a financial planner, and the parties’ skilled legal advocates should spend the time, attention, and care necessary to “measure twice and cut once”.  Indeed, there may not be a need for multiple Qualified Domestic Relations Orders (“QDRO’s”), which are the documents typically required to divide retirement assets.  That is because the “marital math” may not require entry of any such orders; the retirement account administrators may not require them; or a QDRO imposed on one retirement asset of large value may be all that is needed to effectuate an equal division of all retirement assets.  This determination is both fact and case sensitive, and your legal and financial advisors will recommend various options for the parties to consider and then choose.

At the time the QDRO is issued, it must comply with the conditions of the retirement plan. Any disputed points could cause costly delays in the divorce process. The Plan  Administrator will get a draft of the QDRO to review and give preliminary approval or suggestions as to how the document could be made Plan compliant.  The attorneys and the QDRO company will make the needed changes, the lawyers will sign the documents, and the lawyers will submit them to court for review, signature, and entry by the Judge, followed by return to the lawyers for final submission to the Plans.

The QDRO documents are separate from the final divorce documents, but should be processed at the same time, or as close thereto as possible.  This avoids lapses, failures to complete the process, or difficulties encountered if one of the parties happens to die before the process of division and distribution is completed.

In sum, if you are going through a divorce, whether or not you are dealing with retirement assets, it is essential that you obtain quality legal advice. At the Law Offices of Hanan M. Isaacs, P.C., our family law attorneys will work closely with your financial advisers and you.  We will advocate for you with skill and compassion. Call our Central Jersey offices at 609-683-7400 or contact us online for a near term appointment and a reduced fee initial consultation.  We will listen to your facts, advise you on the law, and make recommendations regarding the best path for you.  Call today. You will be glad you did.