While overall divorce rates have declined in recent years, more and more couples over the age of 50 are choosing to divorce. This concept is known as grey divorce. Divorcing later in life can bring up unique issues and could potentially impact either spouse’s financial stability.
Older couples are either nearing the age of retirement or are already retired. This means there is less time to earn an income, making the division of retirement benefits a prime concern in grey divorce cases. It is important to understand New York’s laws on dividing retirement funds to protect the future of your finances.
Retirement Funds are Marital Assets
New York is an equitable distribution state, which means that marital property is not divided 50/50. Instead, marital property is split in a way that the court considers fair for each party. Courts base this decision on factors regarding each party's specific circumstances.
Only marital property is divided in equitable distribution; this is any property that either spouse accrued during the marriage. This includes retirement funds and pension plans that were earned while the couple was married.
The Majauskas Formula
Retirement benefits are considered marital property, meaning they will be divided in the event of a divorce. If both spouses can determine how to distribute retirement pensions on their own, they can do so as long as each party is satisfied with the amount. However, if neither spouse can agree, the court will typically follow the Majauskas Formula, which was established the State Court of Appeals in Majauskas v. Majauskas.
The formula applies to all types of retirement plans, which might include:
401(k)s
Pension plans
IRAs
403(b)s
Any other employer-sponsored plan
Essentially, the Majauskas Formula takes one half of the Participant’s pension and gives it to the other spouse. Depending on the case, the court can modify the formula or choose another way to distribute the benefits. However, the typical formula is:
50% multiplied by the years of service credit accrued during marriage divided by the total service credit at the time of retirement.
Protect Your Assets
If you decide to get a grey divorce, it's important to understand New York's equitable distribution laws fully. It is recommended that you contact a New York City asset division lawyer from Eiges & Orgel, PLLC. We understand how crucial it is for you to protect your financial interests during this time, and are dedicated to protecting the future of your financial stability.
Call us at (347) 848-1850 if you have any questions about getting a divorce.