Divorce tends to have a powerful impact on your financial situation. Careful financial planning prior to and during a divorce can minimize the financial consequences of your divorce. Especially for those getting close to retirement age, the manner in which individuals plan for divorce can directly impact their quality of life.
Understanding Colorado law regarding pensions and retirement accounts in divorce isn't particularly simple. There are many factors that influence how the courts handle retirement accounts and pensions, meaning that there is no straightforward and standard solution to these significant assets.
Regardless of whether the pension is in your name or you were a stay-at-home spouse with no retirement assets in your own name, you need to educate yourself about marital property and your rights to it in a Colorado divorce.
Equitable distribution standards apply to retirement accounts and pensions
Like many other states, Colorado uses an equitable division standard in divorces. The courts review the family situation and try to find a solution that is reasonable and fair to both parties.
Equitable does not always mean an even split. Instead, the courts will look at many things, from the length of your marriage to the contributions of each spouse and their future earning potential. Almost all assets acquired during the marriage are subject to division. That includes retirement accounts and employer-sponsored pensions.
Although amounts deposited prior to marriage and after the divorce won't typically get divided, any amounts accrued during the marriage may end up split, including employer matching amounts. Knowing what retirement assets you have or what your spouse has accrued during the marriage is important. That information will help you ask the courts for an appropriate outcome.
The courts are likely to divide the account between spouses, or offset the value of the retirement account or pension with another valuable consideration or even an order of spousal support when one spouse begins receiving the pension.
Protecting your rights to retirement assets will be important for your financial stability
Retirement after a divorce is often more difficult. Unless you have many years in which to financially recover, the costs of divorce and the process of splitting your assets with your spouse will likely diminish your retirement funds and force you to compromise on your standard of living during retirement.
The best way to reduce the negative consequences of divorce on your retirement is to carefully review financial records related to retirement accounts and pensions. Also, advocate for yourself throughout the asset division process.
Working with a Colorado attorney who knows how to be aggressive when necessary can help you preserve as much financial stability as possible in a contentious divorce.