As a family law or divorce attorney practicing in the area of Troy, Oakland County, Michigan, I deal with the division of property and retirement accounts. One question of concern that many clients have is what date the court will pick to determine the value of his or her retirement accounts and the spouse's retirement accounts.
When placing a value on a retirement account or determining the balance of a retirement account, what date will the court use to determine the value of each person's accounts for the purpose of property division in a divorce case?
The goal in distributing marital assets in a divorce proceeding is to reach an equitable division of property in light of all the circumstances. With regard to the valuation date of a particular asset, such as a retirement account, the trial court has discretion to ensure that the asset is divided in an equitable manner, but the general rule for the division of marital assets is that the assets are to be valued at the time of trial or at the time the judgment of divorce is entered. The trial court may deviate from the general rule to ensure an equitable division, for instance, where one party alters his or her actions during the pendency of the divorce in order to affect the value of the marital asset.
In the recent case of Vilcans v Vilcans, Michigan Court of Appeals, Docket No. 313007, April 30, 2013 (unpublished), the wife argued that the divorce court should not have used date of trial (September12, 2012) to determine the balances of the parties' retirement accounts but rather the date of the parties' separation in May 2010. She argued that the separation date was the more appropriate date because at that time both parties were making regular contributions to their respective retirement accounts and the husband started making less contributions to his account after the separation.
The Michigan Court of Appeals agreed with the family law court's use of the trial date to determine the value rather than two years earlier when the parties physically separated. First, the wife provided evidence at the divorce trial regarding the value of her own retirement account as of the date of separation but neither party presented any evidence of the value of the husband's account as of the date of the separation so the court could not really use that date as the wife failed to provide sufficient information to allow the court to use that date.
Second, it appears that the husband in that case was contributing 11 percent of his income to the retirement account at the time of separation (May 2010), which he reduced to 9 percent a few months later, then to one percent in December of 2010. While the wife argued that his actions caused diminishment to his share of the retirement accounts, she also stopped contributing to her account entirely in December 2010. The court indicated that while the husband may have benefited from her higher level of contributions from May through December 2010, the wife benefitted from the husband's 1 percent contribution from December 2010 to September 2012. Therefore, the court did not abuse its discretion when choosing the date of trial to value the retirement accounts.
Typically the divorce court will use the date of the trial or ta date as close to the date of the judgment as possible to determine the value of the marital assets. Family law judges will sometimes request or demand that the attorneys produce updated copies of the records at the close of oral argument to have the information necessary to use a date certain to determine the value of the property. For instance, say that the closing argument is made on May 16, 2013, the court may request that the parties provide updated documents with account balances as of June 1, 2013 and then use the June 1 date to value the assets.
I typically advise my clients, where possible, to stop putting money into the retirement accounts before they or the other spouse files for divorce. This is for practical reasons; often the budget is stretched very thin during a divorce case and the extra cash is helpful. Once the case is filed, either party may request that the court enter ex parte orders which may require both parties to continue to contribute toward all the parties' expenses and assets as they did during the marriage until further order of the court and the client may have difficulty decreasing the contribution once the case is filed.