Dividing marital assets after a divorce can be complicated. You and your spouse may disagree on how to divide each asset, including retirement accounts. Generally, the law treats retirement accounts, like real estate and savings, as part of your marital assets and divides them similarly.
What should you know about dividing retirement accounts in a North Carolina divorce?
Community vs. common law property
Most states, including North Carolina, follow a common law property system. Unlike the community property system, which splits all marital assets 50/50 between spouses, common law property divides assets based on what the court thinks is fair and equitable.
The law considers assets acquired before the marriage, inherited or received as gifts, as separate property. Separate properties are not subject to equitable distribution rules.
Where do retirement accounts fall?
As a common law state, North Carolina divides retirement accounts using equitable distribution. If your situation permits, you can agree on the division terms with your spouse or let the court decide how to divide your assets. However, if you have a prenuptial or postnuptial agreement, the court will follow that instead.
The court will issue a Qualified Domestic Relations Order (QDRO) to divide your and your spouse’s retirement and pension plans.
Updating your retirement account beneficiaries
Updating your retirement account beneficiaries immediately after the divorce is highly advisable. Otherwise, your intended beneficiaries might have difficulty receiving those benefits if you suddenly pass away and your listed beneficiary is still your ex-spouse.
When dividing retirement accounts during divorce, taxes and payouts are other things to think about. You may consider talking to a lawyer to understand better how to manage your assets during the divorce.