The retirement accounts tied to your business are more than numbers on a statement. They are the result of years spent taking calculated risks, reinvesting profits and planning for a future beyond the actual business.
In a divorce, many business owners do not realize that Kentucky may view these accounts as divisible marital property. There is a chance that a portion of what you have saved up for your retirement may go to your ex-spouse.
Know which retirement funds are subject to division
Essentially, any amount you contributed to your retirement accounts during the marriage is subject to division. This includes:
- 401(k) plans and traditional IRAs
- SEP-IRAs and SIMPLE IRAs
- Solo 401(k) plans and profit-sharing arrangements
- Pension benefits and defined benefit plans
What you had before marriage, and how it grew on its own through market performance, typically stays yours. For example, if you started a SEP-IRA with $50,000 before getting married, that original amount and its natural growth remain separate property. Any new contributions you made while married become marital property. Clear documentation is key to proving what’s what.
Understand how courts decide on property division
Kentucky courts aim for an equitable distribution of marital property. This means they will make their decision based on a variety of factors, such as:
- How long you were married
- Each spouse’s financial situation when the division occurs
- What each person contributed to acquiring marital assets, including homemaking and household management
- The overall value of what each spouse receives
Courts do not split retirement accounts automatically down the middle. Instead, they look at your specific circumstances. As a business owner, you may have to distinguish and prove which contributions happened during the marriage and which came before.
Get the knowledge you need
Every contribution you made to your retirement accounts was a choice to invest in your future security. Knowing what is at stake early allows you to develop a strategy to protect it, whether that means negotiating to preserve certain accounts or building documentation that protects pre-marital balances. Professional legal guidance is available to help you make informed decisions.