Divorces can be emotionally and financially exhausting, with asset division being a significant concern. Among these assets, retirement benefits often hold great value in a marriage. In Wisconsin, retirement benefits are considered as property and are typically subject to division during a divorce. This division is accomplished through a legal procedure known as equitable distribution.
Understanding Equitable Distribution
Equitable distribution is the process through which a judge determines the division of property and assets between divorcing couples. The term "equitable" emphasizes fairness and justice rather than an equal split. Therefore, assets are divided considering what is reasonable and just for both parties involved.
Differentiating between Retirement Benefit Types
When considering retirement benefits in a divorce, there are two main types to keep in mind: defined benefit plans and defined contribution plans.
Defined Benefit Plans
A defined benefit plan, often referred to as a pension, is an employer-sponsored retirement savings plan in which the employee receives a predetermined amount of money during retirement. The employer takes on the responsibility of guaranteeing the pension payment, which is determined by a formula considering factors such as salary, years of service, and age at retirement.
Defined Contribution Plans
On the other hand, a defined contribution plan is an employer-sponsored retirement plan that involves employee contributions, sometimes matched by the employer. Prominent examples of defined contribution plans include 401(k) and IRA plans.
The Division of Retirement Benefits in Wisconsin Divorces
Wisconsin follows a community property approach, meaning that all marital property and assets are generally divided equally during a divorce. However, retirement benefits, such as pensions and 401(k)s, are not considered community property in Wisconsin. Instead, the state utilizes the equitable distribution process to divide these retirement benefits.
How Retirement Benefits are Divided in Wisconsin
In Wisconsin, when dividing retirement benefits, a qualified domestic relations order (QDRO) is employed. This legal order enables retirement benefits to be paid to an ex-spouse. The QDRO specifies the amount the ex-spouse will receive and the payment timeframe.
The Importance of Hiring a QDRO Specialist
It is crucial to acknowledge that division of retirement benefits using a QDRO is a complex undertaking. It requires a comprehensive understanding of both the law and the retirement plan involved. Therefore, it is highly advisable to enlist the services of an attorney specializing in QDROs or a QDRO specialist. These professionals can handle the drafting and implementation of the QDRO, ensuring a smooth and accurate process.
Conclusion
Retirement benefits hold substantial value as marital property and are subject to division during a Wisconsin divorce. In Wisconsin, the division of retirement benefits is accomplished through the equitable distribution process. Hence, it is essential to seek the assistance of an attorney specializing in QDROs or a QDRO specialist to handle the drafting and implementation of the QDRO, ensuring a logical and coherent approach to asset division.