Division of retirement accounts in MN

[sprocket454]

What is the name of your state (only U.S. law)? MN

I have received a divorce proposal from my wife's lawyer. There really isn't much I disagree with. I do take exception to how she proposes the retirements accounts be split. After subtracting marital debt she splits the balance 50/50.

MN is not a community property state; it is an equitable distribution state. 80% of the retirement funds were in my accounts, but I guess that really doesn't enter into it in the court's eyes.

I think a 50/50 split is unfair and not equitable for the following reason: She is 7.5 years younger than me. That means that if we both retired at the same age I would start withdrawing from my retirement funds 7.5 years before she would. Hers would have another 7.5 years to grow before she started using it.

She would therefore reap the benefit of 7.5 years worth of interest that I would not have. I don't see how that is fair. I believe the fair thing to do is to assume that the funds will gain interest at a rate based on the average performance of those funds over the last 20 years. She should then receive an amount that results in her having the same amount as me at retirement age also figuring in the standard of living increase.

I crunched the numbers and in our case is is roughly a $10,000 swing. $10,000 more for me and $10,000 less for her.

Do I have a valid argument and if I do is it worth fighting for? Right now if I agreed to her lawyers proposal and signed it, her lawyer would file and the divorce would be final shortly. It will have cost me NOTHING to get the divorce. Her lawyer said I could write her about anything I disagree with. Is this going to end up costing me more than it's worth to fight it?

Thanks for any advice!

 

[sprocket454]

Does anyone have an opinion on this? I have been thinking about it and I think the argument AGAINST my theory would be that since she is 7.5 years younger, then I had 7.5 yrs BEFORE marriage to invest in my retirement and those funds and their growth would not be considered a marital asset.

So although I can subtract off any investment I had prior to marriage, I can't hold back anything accumulated during the marriage. Yes, she gains on the back end at retirement but I SHOULD have gained on the front end by already having money invested for retirement prior to marriage.

Make sense?

 

[Zigner]

Does anyone have an opinion on this? I have been thinking about it and I think the argument AGAINST my theory would be that since she is 7.5 years younger, then I had 7.5 yrs BEFORE marriage to invest in my retirement and those funds and their growth would not be considered a marital asset.

So although I can subtract off any investment I had prior to marriage, I can't hold back anything accumulated during the marriage. Yes, she gains on the back end at retirement but I SHOULD have gained on the front end by already having money invested for retirement prior to marriage.

Make sense?

This is a financial decision you need to make. You can ask for it.

 

[Bali Hai]

Does anyone have an opinion on this? I have been thinking about it and I think the argument AGAINST my theory would be that since she is 7.5 years younger, then I had 7.5 yrs BEFORE marriage to invest in my retirement and those funds and their growth would not be considered a marital asset.

So although I can subtract off any investment I had prior to marriage, I can't hold back anything accumulated during the marriage. Yes, she gains on the back end at retirement but I SHOULD have gained on the front end by already having money invested for retirement prior to marriage.

Make sense?

Doubtful a judge would see it your way, and in fact might see the equitable distribution of the retirement lop-sided in her favor for various reasons.

I would be concerned about paying down marital debt with retirement savings. The lawyer doesn't seem to bright.

 

[sprocket454]

Doubtful a judge would see it your way, and in fact might see the equitable distribution of the retirement lop-sided in her favor for various reasons.

I would be concerned about paying down marital debt with retirement savings. The lawyer doesn't seem to bright.

I can't find where in this topic I said we would use retirement funds to pay off marital debt. Maybe I mentioned something like that in a different topic in the past.

 

[sprocket454]

Doubtful a judge would see it your way, and in fact might see the equitable distribution of the retirement lop-sided in her favor for various reasons.

I would be concerned about paying down marital debt with retirement savings. The lawyer doesn't seem to bright.

So your saying that in my state it is possible that a judge mat see a 50/50 split too lopsided in her favor?

I assumed a judge does not care HOW the money got into retirement accounts and didn't care who contributed more even if one party contributed 100%. In our case she repeatedly refused to contribute more to her 403B even though I suggested she do so on many occasions. She thought we couldn't afford the drop it would make in her paycheck. Mostly though, she just never got around to increasing her contribution. Is it my job to hold her hand and walk her into personnel dept?

I'm assuming everything I just wrote in the previous paragraph is irrelevant in the courts eyes. Am I right?

What is relevant?

 

[Ohiogal]

So your saying that in my state it is possible that a judge mat see a 50/50 split too lopsided in her favor?

I assumed a judge does not care HOW the money got into retirement accounts and didn't care who contributed more even if one party contributed 100%. In our case she repeatedly refused to contribute more to her 403B even though I suggested she do so on many occasions. She thought we couldn't afford the drop it would make in her paycheck. Mostly though, she just never got around to increasing her contribution. Is it my job to hold her hand and walk her into personnel dept?

I'm assuming everything I just wrote in the previous paragraph is irrelevant in the courts eyes. Am I right?

What is relevant?

Anything contributed to the retirement during the marriage is a marital asset. You split the combined total of both retirement accounts marital contributions equally. That is normally how equitable distribution works. So how much of your retirement account was contributed during the marriage? All of it?

 

[Bali Hai]

I can't find where in this topic I said we would use retirement funds to pay off marital debt. Maybe I mentioned something like that in a different topic in the past.

I have received a divorce proposal from my wife's lawyer. There really isn't much I disagree with. I do take exception to how she proposes the retirements accounts be split. After subtracting marital debt she splits the balance 50/50.

 

[Bali Hai]

So your saying that in my state it is possible that a judge mat see a 50/50 split too lopsided in her favor?

No. The judge has the power to determine she gets 70 and you get 30 for instance.

I assumed a judge does not care HOW the money got into retirement accounts and didn't care who contributed more even if one party contributed 100%. In our case she repeatedly refused to contribute more to her 403B even though I suggested she do so on many occasions. She thought we couldn't afford the drop it would make in her paycheck. Mostly though, she just never got around to increasing her contribution. Is it my job to hold her hand and walk her into personnel dept?

I'm assuming everything I just wrote in the previous paragraph is irrelevant in the courts eyes. Am I right?

What is relevant?

Yes you are right.

Marital assets, marital debt and how the judge determines equitable distribution is what is relevent.

 

[sprocket454]

I have received a divorce proposal from my wife's lawyer. There really isn't much I disagree with. I do take exception to how she proposes the retirements accounts be split. After subtracting marital debt she splits the balance 50/50.

You are correct. Sorry. I assumed the lawyer was doing something like a balance sheet. Here is all the assets, and here is all the debt. Subtracting the debt we now have the net worth and that is what is split. But I can't make that work on paper right now. It doesn't make sense. I will look at the proposal again when I get home to see if I am missing something.

I also trying to figure something out. If the split is always 50/50 then how does an equitable distribution state differ from a community property state? Isn't it because I can argue that 50/50 is not an equitably distribution?

If her wages were 40% and mine were 60% then she should have been contributing 40% of the retirement funds and me 60%. Then we would have both put in our fair share and I could understand a 50/50 split. But I put in 80% and she put in 20%. She simply did not contribute to retirement accounts in an equitable way.

 

[LdiJ]

You are correct. Sorry. I assumed the lawyer was doing something like a balance sheet. Here is all the assets, and here is all the debt. Subtracting the debt we now have the net worth and that is what is split. But I can't make that work on paper right now. It doesn't make sense. I will look at the proposal again when I get home to see if I am missing something.

I also trying to figure something out. If the split is always 50/50 then how does an equitable distribution state differ from a community property state? Isn't it because I can argue that 50/50 is not an equitably distribution?

If her wages were 40% and mine were 60% then she should have been contributing 40% of the retirement funds and me 60%. Then we would have both put in our fair share and I could understand a 50/50 split. But I put in 80% and she put in 20%. She simply did not contribute to retirement accounts in an equitable way.

Unfortunately your idea of what is "equitable" and the courts idea of what is equitable is not the same. As Ohiogal already pointed out if the money that funded the accounts was money earned during the marriage it is a marital asset. It doesn't matter whose paycheck it came from.

 

[stealth2]

IMO, the amount accrued between the date you married and the date you divorced sould be split evenly. And that should inckude ALL of your retirement accts - yours and hers.

 

[Bali Hai]

IMO, the amount accrued between the date you married and the date you divorced sould be split evenly. And that should inckude ALL of your retirement accts - yours and hers.

Most would expect that, but OP should know that equitable does not mean equal.

How are you dear?

 

[sprocket454]

I don't know if anyone has actually addressed my point in the original post (besides me). Because of our age difference she will retire 7.5 years after me, assuming we retire at the same age. In a 50/50 split her share will have an extra 7.5 years to grow, therefore at retirement, which is what the funds are for, the split WILL NOT result in anything close to 50/50. I think an equitable distribution should take that into account.

I know I made a second post where I said that an argument against that might be that I had an extra 7.5 years prior to our marriage to fund my retirement. After thinking about that, I don't think it matters. SHE will have an extra 7.5 yrs to fund her retirement after we are divorced, so the two cancel out.

Here's an analogy. For the sake of argument let's say we were to split two identical cars but neither of us were allowed to drive them until retirement. Both were Fords. At retirement mine was still a Ford but hers had now become a Rolls Royce. Would that be fair?

 

[LdiJ]

I don't know if anyone has actually addressed my point in the original post (besides me). Because of our age difference she will retire 7.5 years after me, assuming we retire at the same age. In a 50/50 split her share will have an extra 7.5 years to grow, therefore at retirement, which is what the funds are for, the split WILL NOT result in anything close to 50/50. I think an equitable distribution should take that into account.

I know I made a second post where I said that an argument against that might be that I had an extra 7.5 years prior to our marriage to fund my retirement. After thinking about that, I don't think it matters. SHE will have an extra 7.5 yrs to fund her retirement after we are divorced, so the two cancel out.

Here's an analogy. For the sake of argument let's say we were to split two identical cars but neither of us were allowed to drive them until retirement. Both were Fords. At retirement mine was still a Ford but hers had now become a Rolls Royce. Would that be fair?

Sorry, but that argument isn't going to fly at all.