My Spouse Cheated, Do I Get More in the Divorce?

In general, you will not necessarily get more assets out of the divorce just because your spouse cheated.  In New York, property is divided based on “Equitable Distribution” Law and not based upon the fault of one of the parties.  First, it is determined whether property is separate or marital.  Then, once the marital property is identified, the Court will use “Equitable Distribution” to divide it. 

Separate Property

All property will be looked at to figure out if it is separate or marital.  Separate property in a divorce is property a spouse owned before the marriage, inheritances, personal injury awards or gifts from someone else during the marriage.  Separate property stays separate as long as it is not mixed with martial property. 

Marital Property

Marital property in a divorce is all property either spouse bought during the marriage.  Regardless of who is named as owner, if the property was acquired after you were married, then it is marital. 

Equitable Distribution                                   

New York is an equitable  distribution state.  What that means is that in a divorce, the property that is marital will be split based according to what is fair.  What is fair does not always mean equal or 50/50.  When determining fairness, the court considers the couple’s income, their living situations before and after the divorce, who will have custody of the children, and wasteful dissipation of assets, among other things.   

Wasteful Dissipation of Assets

If the Court feels that your spouse used marital money in a wrongful way and you incurred a loss because of it, then the Court might give you more in the divorce.  What is “Wasteful Dissipation” is determined on a case by case basis, but sometimes has included gambling, alcohol or drug use, poor business decisions, and spending money on a girlfriend/boyfriend. 

If your spouse’s cheating does not amount to wasteful dissipation of marital assets, then the Court will determine what assets are separate and marital and divide everything based on what it feels is equitable or fair.  You will not automatically get more because your spouse cheated, but it may be considered. 

I'm a Stay at Home Spouse, How Do I Save for Retirement?

I'm a Stay at Home Spouse, How Do I Save for Retirement?

While its clear that a Stay at Home parent usually does the job of many (chauffeur, personal chef, housekeeper, etc.), they often don't save for retirement like they are employed that way.  Many rely on their spouse to save for their joint retirement, but you could be shortchanging yourselves (quite literally) by doing so.  Many families could benefit from having something called a "Spousal IRA."

What is a Spousal IRA?

A Spousal Individual Retirement Account (IRA) is just a regular IRA account.  As with any other IRA account, the account must be set up in one person's name.  In this case, it is set up in the name of the stay at home spouse.  However, the IRS allows the working spouse to contribute money each pay period directly into the Spousal IRA, even though it is not in their name.

Why Do I Care? 

Advantage #1 - Boost Your Joint Retirement Income

One advantage to contributing to a Spousal IRA is that it allows the couple to boost their joint retirement income.  Each spouse will have contribution limits.  If your spouse has a contribution limit of $5500 and you have a contribution limit of $5500, you can now put away twice as much pre-tax money for retirement.  This matters because without a Spousal IRA, you are saving for two people's retirement, but only putting away enough retirement money for one. 

Advantage #2 - Diversify Your Investment Portfolio as a Couple

Another advantage is that the non-working spouse can have the same or different investment choices from the working spouse.  An employer sponsored retirement account may limit your investment choices, but you can choose which type of Spousal IRA account you open and what types of investments, mutual funds, stocks, bonds, and diversify your overall portfolio as a couple.

Advantage #3 - Account in Your Name

Since the Spousal IRA is the non-working spouses' account, they can name their own beneficiary and continue saving for retirement in their name.  If you once worked and already had an IRA, you can have these contributions put into that account and continue to build that investment, instead of letting it sit.  If you get divorced, the account is in your name and will be subject to division according to the divorce law in your jurisdiction.

What Kind of Account Can I Have?

A Spousal IRA can be either a Traditional IRA or a Roth IRA.  Once opened, you must comply with the rules for that type of account.  You can either open a new IRA account, or if you worked in the past and already have an IRA through a previous employer, add to the value of that account. 

What's the Catch?

The eligibility requirements for the Spousal IRA are:

• You must be MARRIED
• You must FILE TAXES JOINLY
• You must have JOINT COMPENSATION or earned income of at least the amount you contribute to the Spousal IRA and any IRA you contribute to on behalf of your spouse.
• The non-working spouse must be under 70 1/2 in the year of the contribution for a traditional IRA. There are no age restrictions on a Roth IRA for a non-working spouse.