In a divorce case in North Dakota, there are a litany of issues that will be of concern and in dispute. For those who have significant retirement assets, the high asset divorce process can be complex and worrisome for both the person who has the account and the other party. Both sides will want a fair share. Part of dealing with this is to keep track of court rulings regarding how the law deals with them. A recent decision makes it imperative to re-assess how retirement assets are handled.
When a person receives retirement assets as part of a divorce settlement, a later filing of bankruptcy can negatively impact the funds in the account. This can be problematic for the spouse who received it. In general, if the account is a 401(k), it will be shielded should there be a bankruptcy. In addition, the IRA is protected up to $1.3 million based on a capped amount that is adjusted based on inflation. This leads to some financial advisors mixing the funds with other assets the clients might have. With the recent ruling, however, that could be placed in jeopardy with a bankruptcy.
A precedent was set after a man got half of his wife's 401(k) and the entire IRA. He later chose to file for bankruptcy and stated that those funds should be off limits to creditors. After a ruling from a lower court, a higher court upheld the ruling saying that the funds could not be exempted. This ruling applies to states in the 8th Circuit, of which North Dakota is a part. This should be a consideration when a couple is divorcing and has these plans with the parties battling over them with the possibility that a bankruptcy might be needed in the future.
Property division can encompass many areas, including motor vehicles, homes, sentimental items, bank accounts, retirement accounts and more. Oftentimes, especially in high asset cases, these are part of a contentious proceeding with both sides wanting as much as they deem is fair. This ruling could impact the retirement accounts and factor in as to whether the parties will contend for them as intensely as they did before. Getting the right information about family law may help.