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The Law of Retirement Division in Divorce has Changed

One of the largest asset many married couples have are their retirement accounts. Division of those retirement benefits is one of the essential jobs of a trial court in divorce proceedings. The law governing how a spouse’s retirement benefits are divided changed in 2018.  In Rel v. Rel, the Alabama Court of Civil Appeals used its opinion to highlight those changes.

Old Law Created Barriers to Retirement Division in Divorce

For divorce cases filed before 2018, the spouses had to be married for 10 years before a retirement account could be divided like any other asset.  Still, even where the spouses had been married a decade or more, the law created evidentiary barriers to dividing that pot of money.

Whether under old or new law, only that amount of a retirement account that has accumulated during the marriage is marital property.  The rest is non-marital property that is not generally subject to division.  Under the old law, it was the spouse whose name was not on the retirement account who had to prove what part of that pot of money was marital.  In some cases, the type of proof was also limited.  In the Rel case for example, the court appears to have required the testimony of an accountant.

As a result, if a spouse whose name was on the account was able to hide information about the value of the account at the time of the marriage, that “sneaky spouse” might benefit by keeping all of the retirement.

New Law Makes Division of Retirement in Divorce Easier

Under the new law, the 10 year rule has been eliminated.  Moreover, the court can now take all sorts of proof as to the value of the account and how much should be divided.  It is now the burden of the spouse whose name is on the account to show its value over time.

Appeals Case Shows Difference in New Law

In Rel v. Rel, the parties had been married for more than a decade, but the husband had a retirement account for about 10 years before the marriage.  Because the case was filed before 2018, the old law applied.  Therefore it was the wife’s obligation to show the value of the retirement account when they got married, to the pre-marital portion could be attributed as “non-marital.”

The wife asked husband in discovery what the account value was when they got married, but he said he didn’t know and that ended the inquiry.  It likely would have been easier for husband to get the information than wife, but he was not required to do so.  Because wife did not get the necessary account information before trial, she could not claim any portion of his retirement.

The outcome of the case shows the importance of pursuing evidence through discovery, compelling the other side to produce that discovery, and – where necessary – delaying the trial with a continuance until such time as all the evidence is available.  However, even with the problems wife had discovering husband’s financial information, the ultimate result likely would have been different under the new law.

Where to Learn More:

  1. Read this article on the effect divorce can have on your plans for retirement;
  2. Learn about a Qualified Domestic Relations Order (or QDRO) and how the court uses it to divide a retirement account upon divorce;
  3. Read the Alabama Court of Civil Appeals opinion in Rel v. Rel here;
  4. Contact Browne House Law and its divorce lawyers Bret Smith and Jason P. Bailey about dividing the assets in your divorce.
  5. If a judge has issued a decision in your case and you want to appeal, check out these articles about when to appeal and how to start your appeal, or contact Browne House Law to help you through it.

Be sure to talk to your attorney about all of your assets and debts early and often during the divorce process.