We receive questions all the time from clients and prospective clients regarding retirement plans and how they are divided in divorce. Unfortunately, there is no quick and straightforward answer to that question. The division of property in Indiana depends greatly on the facts and circumstances of each case. However, there are some uniform concepts and rules that will help give you an idea of how the trial court will treat a retirement plan during divorce. In this blog, we provide a brief overview of how property is divided in Indiana, and specifically how retirement plan assets are divided in a divorce.
In divorce cases, it is well established in Indiana that all “marital property” goes into the marital pot for division. Marital property is property owned by either spouse, regardless of if the property was acquired before the marriage or during the marriage. Nor does it matter if the property is titled in only one of the spouse’s names, or if it is jointly titled. All property is presumptively marital property. Importantly, Indiana’s “one-pot” theory prohibits trial court’s from excluding any asset in which a party has a vested interest. When it comes to retirement accounts, the first step in determining whether it will be included as marital property is whether the retirement account is vested.
The importance of determining whether a retirement account has vested is that, in many instances, individuals getting divorced may not be at an age in which they are receiving their pension or retirement. Instead, payments may not come for many years down the road. But does that mean you will not be entitled to the pension? Well, it depends. As our Supreme Court has explained, whether a right to a present or future benefit constitutes an asset that should be included in marital property depends mainly on whether it has vested by the time of dissolution.1
A retirement plan will be considered to be vested if: (1) there is a present right to withdraw pension or retirement benefits; (2) the right to receive pension or retirement benefits that are not forfeited upon termination of employment but that are payable after the divorce; and (3) the right to receive pay that was acquired during the marriage that is or may be payable after the dissolution of marriage.2 Thus, if you or your spouse has a retirement plan that is vested, or at least partially vested, the retirement plan will be considered a marital asset subject to division.
These types of situations are extremely fact-sensitive, and the above information is general in nature. Divorces are emotional times for all involved. Not only are they emotional, but often time complex, especially when it comes to property division and pensions/retirement accounts. Obtaining skilled counsel is key to relieving some of the burdens that comes with divorce. This blog was written by attorneys at Ciyou & Dixon, P.C. who handle divorces of all types throughout the state. It is written and posted for general educational purposes and is not to be construed as legal advice or solicitation for services. It is an advertisement.