Division of Retirement Benefits in Michigan Divorce

When adults enter into the contract of marriage, it is generally with the knowledge that “mine” now becomes “ours”. Shared finances mean that anything one spouse owns becomes the property of both, unless otherwise stated via prenuptial agreement, and even prenups have some limits concerning what is considered reasonable.

Going into a divorce, then, you’re probably aware of the fact that division of assets means splitting anything of monetary value, including real estate, vehicles, bank accounts, and more. What you might not realize is that retirement accounts are also on the table. How does the division of retirement benefits work in a Michigan divorce? Here’s what you should know.

What are Retirement Benefits?
For the purposes of division of assets in a Michigan divorce case, retirement benefits are considered to include any vested pension or retirement benefit accrued during the marriage, as well as contributions to a pension, annuity, or other retirement plan. Non-vested pensions, annuities, and retirement benefits may or may not be up for grabs, but the court will make a determination as to whether or not they should be considered in the case.

Federal, state, and local government pensions are subject to division of assets in Michigan, as are military pension plans, although there are specific acts outlining how these divisions should occur, as well as the role state courts play in making determinations about dividing benefits. There are also some protections in place for servicemembers where pensions are concerned. Division of Social Security benefits falls under federal law and may not be handled by state courts.

What are Spouses Entitled To?
Calculating the amount of retirement benefits a spouse is entitled to following divorce is a complex process. It has to do with the amount of time the couple was married, as well as how much a given retirement account accrued in contributions and interest during the marriage (as a spouse is not entitled to any funds accrued prior to marriage).

For military pensions, in particular, active servicemembers receive some protections from the Servicemembers Civil Relief Act. This includes the 10/10 rule, which states that a former spouse is only entitled to a portion of the military pension if the servicemember completed at least 10 years of service and the couple was married for at least 10 years.

How are Retirement Benefits Divided?
There are two ways to divide retirement benefits in Michigan. One spouse can give the other interest in retirement benefits, which is known as the deferred method, or he/she can cede marital assets of equal value to the retirement benefits. This is called the offset method. Most couples prefer the offset method if at all possible because it helps them to make a clean break following the divorce, whereas the deferred method could necessitate interactions for the foreseeable future.

Divorce can be a contentious affair, especially when it comes to deciding who gets what. However, it can be made easier with qualified legal advice and representation. Contact The Gucciardo Law Firm today at 248-723-5190 to get the help you need and the settlement you deserve.