Outlining the Fair and Proper Division of Retirement and Inherited Accounts

by | Oct 24, 2023 | Case Study | 0 comments

It’s of utmost importance that all calculations are performed based on legitimate account statements rather than spreadsheets provided, even if the divorcing parties agree. Spreadsheets and human attempts at record keeping often carry flaws, can easily disguise or exclude pertinent information, and ultimately lead to an unfair division of assets.

Furthermore, the below illuminates the importance of record keeping for non-marital and retirement accounts. In this case, Greg Gann’s due diligence included requesting proper copies of statements, outlining proper split options of retirement funds with survivor benefits considered, meticulous account of non-marital assets, and review of tax filing status so that the division of assets is not only fair but also accurate.

A letter to attorney Joe by Greg Gann in support of mutual clients Judy and John:


There are a few financial issues that need to be resolved in order for Judy and John to reach an accord. I would like to collaborate with you to settle this outside court and get this finally across the finish line, enabling this family to move forward in the most healthy and productive way. The most significant issues that need to be resolved are the following:

Thrift Savings Plan:

I have seen a spreadsheet purportedly summarizing each quarterly account statement. However, I am not in receipt of the actual statements to verify the accuracy of the spreadsheet.

To the extent to which John can substantiate how much of the growth was attributable to the pre-marital amount in the TSP from actual statements rather than a self-produced spreadsheet, Judy would be fine accepting whatever that number turns out to be. However, all contributions must be treated as marital until the date of execution of a marital settlement agreement. Under the law, they remain married, and this is marital property. Suppose John cannot substantiate the non-marital portion from actual account statements. In that case, a coverture fraction should apply, the numerator of which should be the amount of time invested in the TSP while married, with the denominator being the total amount of time John has invested in the TSP.

Federal Employees Retirement System:

The parties will split on a 50/50 basis the marital share of John’s monthly FERS retirement benefit on an as-if and-when basis. The marital share will be defined as a fraction, with the numerator being the number of months from the date of marriage through the date of a fully executed marital settlement agreement and the denominator being the number of months from the date John commenced enrollment in the pan through the date of his retirement.

John will agree to Judy receiving a survivor benefit on his FERS retirement with the understanding that Judy will be responsible for bearing the costs of the survivor benefit, with it coming directly from her share of the monthly FERS benefit amount. Alternatively, if Judy elects to forego a FERS survivor benefit in exchange for acquiring life insurance on John’s life, for which she will pay in full, John will fully cooperate enabling her to secure such coverage.

Inherited, Non-marital Accounts:

The following accounts were received by Judy through inheritance and have retained their separate, non-marital status:

  1. Bank A Designated Beneficiary: XXXX-XXXX
  2. Bank A Inherited IRA: XXXX-XXXX
  3. Bank B Savings: XXXXXXXXXXX
  4. Bank A Investor Checking: XXXXXXXXX
  5. Bank A Individual: XXXX-XXXX
  6. The Bank A One account XXXX-XXXX is jointly titled. Judy’s Bank A IRA Rollover XXXX-XXXX originated from Bank Z. All but 15 months were acquired pre-marriage. Judy is willing for John to retain the Bank A One account XXXX-XXXX in exchange for her retaining her Rollover IRA with Bank A, account # XXXX-XXXX.


Due to the significant income disparity, John shall pay Judy monthly alimony in the amount of $2000 until he reaches age 67. This will remain in force unless the death of either party or the remarriage of Judy. Although John has paid educational costs for the children after the parties’ separation, he has not supported Judy. She has had to dip into her savings unfairly. Back or retroactive alimony to which she is equitably entitled should be paid by John to Judy.

Resolution of Tax Issue:

I understand that, unbeknownst to Judy, John filed jointly for the 2020 tax year. This needs to be reconciled through the martial settlement agreement with Judy being indemnified for any potential liability or penalty.

These are the most pertinent issues that need to be resolved. Upon the resolution of these issues, the remaining others will easily flow.

Let’s set up a time to discuss.

Greg Gann