Some of the greatest challenges in dissolving a marriage involve splitting up marital assets, including retirement accounts. When beginning the divorce process, it’s important to understand how Massachusetts courts will value and divide IRAs so that you can formulate a plan to protect your most critical assets.
As you’re navigating the Massachusetts divorce process, courts will attempt to divide marital property equitably. This does not necessarily mean that your IRA and other shared assets will be divided evenly, although 50/50 splits are quite common.
IRAs are Often Treated as Marital Property
Much of the time, IRAs are lumped in with other marital property. In the state of Massachusetts, the term “marital property” refers to assets that were acquired after the marriage was formed. This includes real property like homes, cars, and land. Marital property also includes stocks, bonds, and IRAs.
While an IRA that you created before you married may be separate property, some of the funds in that account could be treated as marital property. Even if the IRA was opened before your union, the funds you contributed while married and the increase in value during the marriage can be treated as marital property. This means that the court can divide those assets during your divorce proceedings.
What Factors Do Massachusetts Courts Examine When Dividing IRAs?
According to Massachusetts Gen. Laws ch. 208, §34, “The court may assign to either husband or wife all or any part of the estate of the other.” When judges are deciding how to equitably divide your IRA and other assets, this statute requires the court to consider 15 factors pertaining to the couple:
- Length of the marriage
- Conduct of the parties while married
- Age
- Health
- Station
- Occupation
- Amount of income
- Sources of income
- Vocational skills
- Employability
- Estate
- Liabilities
- Needs of each party
- Opportunity of each partner to acquire future capital and income
- Amount and duration of alimony
In addition, the court may also consider the needs of dependent children, the contributions each party made to the value of their estate, and non-economic contributions to the marriage, such as serving as a homemaker. To protect their rights with respect to IRAs, it is critical for partners to present the best available evidence supporting a favorable outcome.
Dividing Your IRA in Massachusetts
Let’s take a look at an example of how your IRA could be divided in Massachusetts. Imagine that you entered your marriage with an IRA that was valued at $100,000. Over the course of the next 20 years, you continued to contribute to the IRA, and it is now worth $1,000,000.
In this example, $900,000 of funds were accumulated during the marriage. Each spouse would each receive $450,000 if the courts decided on a 50/50 split. If your spouse has retirement assets of their own, those funds might also be divided or otherwise taken into consideration.
For instance, if your ex-spouse also entered the union with a $100,000 IRA and built it up to a value of $500,000 during the course of your marriage, then courts would need to divide $400,000 from that account as well as the $900,000 from the first account. If these funds are split evenly, then both parties would receive $650,000. While your ex-spouse would be awarded part of your IRA, they would not get half of its total value.
Qualified Counsel Can Help with a Fair Division of Your IRA
To obtain a fair outcome during divorce proceedings, it is wise to partner with experienced legal counselors like the attorneys at Koiles Pratt Divorce & Family Law. We are ready to fight for your rights and protect your financial future. Contact us today to learn more.