At the time of divorce, savings, investment, or retirement accounts (including 401k, pension, and IRA accounts) may be in one spouse’s name or in both spouses’ names. But the name on the savings account, brokerage account, investment account, or retirement account does not determine the ownership or proper division of the funds held in these accounts. Instead, ownership and proper division of the funds will generally be determined by factors such as whether some or all of the funds in the accounts were contributed during the marriage, or if some of the funds were contributed before the parties were married.

If the spouses live in a community property state (as opposed to an equitable distribution/common law property state), and if funds owned by one spouse were placed in an account before the marriage, and more funds were added to the account during the marriage, this commingling of separate and community property may make it necessary for the parties to hire a financial expert to determine ownership of the funds in the account. For example, interest earned and dividends paid on the separate property funds in such an account during the marriage may be community property rather than separate property. Community property states generally include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

In other states—so-called equitable distribution or common law property states—the divorce court attempts to divide the spouses’ assets equitably (fairly) and may consider a spouse’s separate property in deciding to make an unequal division of the spouses’ marital property.

In practice, the difference between the division of assets in community property states and in equitable distribution states is sometimes not as great as it may seem, as the court in a community property state may have the discretion to divide the spouses’ community property on a 60-40, 70-30, or other unequal basis.

When evaluating the division of investment or retirement accounts in divorce, it is also important to consider any tax implications for the division of the accounts.

In Massachusetts, which is an equitable distribution state, the division of assets such as savings, investment, and retirement accounts during a divorce is based on fairness rather than strict equality. The name on the account does not solely determine ownership. Instead, the court considers various factors, including whether the funds were contributed during the marriage or before. For accounts that have both pre-marital and marital contributions, the court may need to distinguish between the two, potentially requiring financial expertise. Unlike community property states, where assets acquired during the marriage are typically considered joint property and divided equally, Massachusetts courts aim for an equitable division, which may not always be equal. The court may also consider separate property when deciding on the division of marital assets. Additionally, tax implications are an important consideration when dividing investment and retirement accounts in a divorce.