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Huntsville, AL 35802

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New Alabama Law Changes How Retirement Accounts Are Distributed in a Divorce

Retirement plan folder

Filing for divorce is never easy, and wading through the complicated rules for valuing and dividing up different kinds of property is a chore best left to experienced divorce attorneys.  Read on to learn about a new law in Alabama that changes how retirement accounts may be distributed in a divorce, and if you have any questions about a pending or expected divorce proceeding, contact the Guntersville family law attorneys at Hawkins Law, LLC.

How property division in a divorce generally works in Alabama

In an Alabama divorce, property is distributed among the married couple according to a system called “equitable division.”  Generally speaking, Alabama courts will divide up the assets and the debts shared by the married couple according to what is most fair or equitable. 

This does not mean that assets are divided strictly equally between the parties as they are in some states.  Alabama courts will undergo an analysis based on a handful of factors to determine who gets what in the divorce.  Alabama courts will first decide what is shared or “marital” property and what is separate property.  With some exceptions, a basic rule of thumb is that property that someone owned before the marriage is separate, while property acquired during the marriage is considered “marital.”  Marital property can include real estate, money, investments, retirement accounts, valuables, etc.

In a divorce, parties typically keep their separate property, while marital property is divided up according to a handful of factors, including:

  • The length of the marriage
  • Each spouse’s contribution to the marriage (monetary and non-monetary)
  • Future income prospects of each spouse
  • Any abuse or adultery committed by either spouse, or other fault leading to the divorce
  • Expected childcare responsibilities following the divorce

A new Alabama law in effect this year changes distribution of retirement accounts

According to Alabama law, retirement accounts may be a part of shared, marital property.  Before 2018, a judge could only distribute a spouse’s retirement account as part of a divorce proceeding if the couple had been married for at least 10 years.  Moreover, a judge could not consider any part of retirement benefits that the spouse acquired before the marriage–meaning only value added during the marriage would be fair game in a divorce proceeding.

HB 208 of the 2017 legislative session, effective January 1, 2018, changes the analysis a bit:  A judge may now consider property like retirement accounts that were acquired before the marriage if the funds were used during the marriage for the benefit of the marriage.  The new law makes clear that interest earned or accrued on retirement accounts during the marriage may be marital property subject to division and clarifies several categories of retirement benefits.   Further, the new law eliminates the 10-year requirement, meaning retirement benefits may be divided as part of marital property even if the couple has been married for less than 10 years.

The distribution of retirement benefits in a divorce is a complicated issue that requires a skilled attorney to negotiate.  If you are in a divorce proceeding in Alabama or are considering filing for divorce, contact the passionate and effective Guntersville family law attorneys at Hawkins Law, LLC for a consultation at 256-571-2829, serving families in Albertville, Boaz and surrounding areas.

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