A question that often arises when a person starts contemplating divorce is “What impact will the current economy have on me if I’m divorced?” This is a valid question to ask before initiating divorce proceedings at any time, but especially so during this deep and lingering recession being felt across the nation today. While the recession may make things like spousal and child support obligations harder to meet in the short term, there are bigger impacts of the recession which may not be felt until much later such as valuations of pensions, 401Ks, and retirement plans.
Many retirement pension plans are defined contribution plans in that the amount an employer must pay is defined, however, most of these plans are funded with stocks and mutual funds. The slump on Wall Street means that the current value of most stocks and mutual funds are likely significantly lower than five years ago, or indeed, two or three years ago. Thus, persons looking to divorce need to be aware of how their spouse’s retirement plans are funded and understand that this may affect any marital portion of the pension. Agreeing to split pension plans in the future in exchange for immediate concessions may no longer be the best decisions for many spouses as the pension plans themselves are a period of fluctuation due to the depressed economy.
If you’re considering divorce, be sure to fully understand your spouse’s retirement plans and be wary of pinning too much on future pay outs from such plans.
This is not legal advice and is not intended as such. If you have any questions regarding divorce and equitable distribution, please call us at 804-423-1382.