New Q&A: The Ex-Files, advice from a family and divorce lawyer. 
Q. How Will Divorce Affect Your Retirement Accounts? Retirement accounts and pensions are often considered marital property. Explain how these will be divided, including the use of Qualified Domestic Relations Orders (QDROs) to transfer retirement funds without penalties.
In most states, retirement accounts and pensions are considered marital property and will be divided upon a divorce. In New York, where I practice, we are tasked with determining the “marital portion” of the retirement account or a pension, as that is the amount that is subject to division. Typically, the marital portion is divided equally between the divorcing spouses.
For retirement accounts, the marital portion is the amount of money that was contributed to the account during the marriage, and the gains or losses on such money. For a pension, the marital portion is determined by dividing the number of years the spouse worked at the company during the marriage by the total number of years worked at the time of retirement.
Since many retirement accounts consist of pre-tax money, there are often taxes and penalties associated with withdrawing money early. When dividing these accounts pursuant to a divorce, a tool called a QDRO (Qualified Domestic Relations Order) is used. This is a document that describes the division of the retirement account, is signed by the court, and submitted to the retirement plan so that they can split the account without the spouses incurring taxes and penalties. The QDRO is also used to divide a pension, as it allows the pension plan administration to provide the “non-titled spouse” with his or her portion of the pension plan once it is in payout status.
Q. Help! I have a thriving business I’ve devoted my life to building and now my spouse has filed for divorce and threatens to ‘take everything from me.’ What should I do?
First things first, your spouse cannot “take everything” from you. However, it is important to know that businesses can make divorces complicated. Businesses typically are both an asset and an income stream. This means that the business will have to be distributed as an asset, and the income earned will have to be determined for the purposes of child support and spousal support.
The value of the business of the asset must be divided. This typically does not mean that your spouse will be awarded shares in your business, and instead means that he/she will receive a payout representing her equitable (in New York) percentage of the value. This will require a valuation, which as the business owner, you hope will come in as low as possible, since that means you will be providing your soon-to-be-spouse with a lower payout. In New York, the percentage the non-tilted spouse will receive is based upon direct (working at the company, handling bookkeeping, marketing, prospecting, or even preparing coffee in the early stages) and indirect (raising children, homemaking, emotional support, etc.) contributions to the business. As the business owner, your goal is to show that there were minimal direct and indirect contributions to the business.
The second step, the business as an income stream, requires a determination of how much the business has made, how much the owner has paid himself/herself, and what (if any) personal expenses are run through the marriage. The business owner will often try to show a reduced level of income, whereas the non-titled spouse will try and show that a Picasso was bought for the office instead of depositing that money into the marital bank account. A business owner will need to combat the argument that expenses like cell phones, cars, and vacations should not be imputed back to them as income. The business owner’s level of income impacts the amount of spousal support and child support that will be paid. Discussing potential exposure with accountants, financial advisors, and lawyers is always encouraged.
Q. What happens to my football season tickets now that I am getting divorced?
Given the value of a set of season tickets, be it for a sports team or the opera, they are considered valuable property. Explain how season tickets could be divided.
More likely than not, season tickets are going to be considered marital property and therefore subject to division upon a divorce. If there is a license attached to the seat, and a fee associated with such license, there is a discernible value to the season tickets. Even without such license, if you began purchasing the season tickets during the marriage then they are a marital asset, while also being a marital expense.
If you do not want to find yourself in a long, drawn-out court battle over who gets the court-side seats, it is best to try and come up with an agreement as to how the tickets will be divided. Some options include one party taking sole ownership of the rights to the season tickets (perhaps for a sum of money by way of a buy-out), evenly dividing the tickets with each party having access to certain games/shows (similar to dividing holidays in a parenting agreement) or selling/gifting the tickets to a third party (whether a family member of otherwise). Some considerations for sole ownership may include who used the tickets more during the marriage, and which spouse has the ability to pay for the tickets in the future.
