You may have started saving for divorce long before you got married. Perhaps your employer offers pension benefits, or you may have started a tax-deferred retirement savings account to slowly fund with a portion of your paycheck.
The account is solely in your name and represents essentially all of the money you have set aside for retirement other than Social Security benefits. Obviously, you expect to use those savings when you eventually retire. If you have to split them with your ex in a divorce, you could find yourself delaying your retirement or significantly reduce your standard of living.
Is your retirement savings account at risk in a New Jersey divorce?
Much of the account could be marital property
Under New Jersey’s equitable distribution rules, marital income and property is subject to division in a divorce. Some people plan ahead of time to preserve certain assets.
If you and your spouse have a prenuptial or postnuptial agreement, that document might earmark your retirement savings as your separate property. In that scenario, you usually won’t have to worry about splitting your retirement savings with your ex.
However, your income earned during the marriage is shared or marital property. Even if your retirement account is solely in your name and your spouse never personally contributed to it, the income you deposited in that account during the marriage is income that they have an interest in as well.
If you litigate your divorce, a judge might order you to divide the account with your spouse. They could also let you keep the account but use its value to justify giving other assets to your ex, like your vacation home or an investment account.
Can you protect your retirement account from division?
The division of your retirement accounts is not a foregone conclusion in a New Jersey divorce even if the account is marital property. You and your ex can potentially set any terms that you both agree on for property division, including allowing you to keep the entire retirement account if they receive something else of significant value for making that concession.
Understanding the equitable distribution rules that apply to property division in a New Jersey divorce will help you prepare for court or negotiate a settlement with your ex.