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If I Get Divorced, What Happens to My LIRA?

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b2ap3 thumbnail Fighting CoupleIf you are getting divorced and wonder what is going to happen to the assets in your Locked-In Retirement Account (LIRA), the good news is that the process is not overly complicated. Like any other marital asset, the funds in your LIRA will be divided according to your state’s policy for division of marital assets. Colorado, for example, is an equitable distribution state, so the funds in the LIRA will be divided equitably by the judge in your divorce case.

It is possible for you and your spouse to come to an agreement outside of court if you wish to adjust your shares in the LIRA’s value to accommodate for other marital assets that you might obtain, such as the marital home. If an agreement cannot be reached, however, it is up to the judge to decide who gets what percentage of the LIRA’s assets. Often, the judge will split the assets 50/50, but depending on other awarded assets, the judge may decide that a greater or lesser portion of the LIRA is more equitable for the spouses. The funds received after division can be taken as a lump sum payment with tax consequences or rolled into another LIRA.

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One thing to consider post-divorce is that the spouse of the policyholder is no longer eligible for death benefits. However, it is possible for the couple to work out a different arrangement if both parties agree or a judge deems it necessary.

At Divorce Matters, our family law attorneys are dedicated to providing exceptional client experience throughout Denver and the state of Colorado.