When married couples divorce, the assets they share are generally divided equally. Among these assets, few carry as much value or long-term importance as a pension. For that reason, these accounts frequently lead to contentious disagreements during the dissolution of a marriage.
When you are facing the challenge of dividing pension and retirement benefits in a Kawartha Lakes high-asset divorce, you should know that you do not have to face this issue alone. A practiced high-asset divorce lawyer from The Riley Divorce & Family Law Firm could assist you with the process.
Anyone going through a high-asset divorce in Kawartha Lakes will need to know the value of their pension or retirement benefits as these assets are included in the calculation for the division of marital property. This means an accurate valuation of the pension is crucial.
Determining what these accounts are worth starts with completing a document known as the Application for Family Law Value. Once the document is submitted to the plan administrator along with a fee, it is the administrator’s obligation to determine the pension’s family law value.
The process of completing the paperwork and applying for the Family Law Value of a pension can be time-consuming. Thankfully, a lawyer can handle this process from start to finish. What’s more, they can answer questions on the best strategy for dividing these illiquid assets as part of equalization.
Once the value of a pension or retirement account is determined, it can be used as part of the equalization process, which involves splitting marital assets in a way that ensures both spouses receive an equal amount in a Kawartha Lakes high-asset divorce.
Of course, there are real challenges that come with navigating around these large assets. Unlike other major purchases, including motor vehicles and real estate, pensions cannot be easily liquidated when cash is needed for equalization payments. The law outlines some solutions. In cases where the pension holder has not yet retired, it is possible to make a single lump-sum payment directly from the account. This transaction cannot represent more than 50 percent of the full account value. The money could be transferred into a different pension account or various retirement portfolios.
Another option is to leave the pension as-is. Instead of withdrawing money or transferring it, it is possible to leave these funds in the account but set them aside for the spouse. They will then receive these benefits monthly during the pension holder’s lifetime. This approach is only possible if the account administrator agrees.
Tax issues must also be addressed when dividing pensions and other retirement benefits during a high-asset divorce in Kawartha Lakes. It is vital to remember that the value assigned to a pension or retirement account during the division of marital property is not the same as its actual future value for tax purposes. Failing to account for future obligations to the government could result in an outcome that is not fair for either party.
Because of the discrepancy between pension values, it is necessary for you to add a liability that reflects the future taxes owed on the account. This could result in a lower equalization payment to a spouse, which will ensure that any contingent future tax debt is considered.
When you are going through the end of your marriage, financial disputes could be unavoidable. While they are never pleasant, you must protect your rights, particularly those that impact your ability to retire in the future. Our skilled lawyers are available 24/7 to help you understand your options.
Call The Riley Divorce & Family Law Firm today to discuss dividing pension and retirement benefits in Kawartha Lakes high-asset divorce cases. We would be happy to set up an initial consultation at your convenience.
Now you can have your Consultation with Paul Riley any time from the comfort of your own home. With video calls from Zoom, your Team at The Riley Divorce & Family Law Firm can meet with you virtually, and learn about your case. All you need is a smartphone, tablet, laptop, or desktop with a built-in camera and microphone.
Paul Riley Law Office
