The short answer is ‘yes’, retirement assets are subject to equitable distribution in Indiana. That means that your spouse could be entitled to half of your retirement accounts once you divorce. One Indiana divorce case that exemplifies this issue is Gatton v. Gatton, Court of Appeals of Indiana, No. 24A-DN-716. In this article, we’ll discuss the case and how it applies to dividing retirement assets during an Indiana divorce. 

Background of the case

After being married for a long time, Husband and Wife decided to divorce. Husband possessed two main retirement accounts: a Union pension and an IRA account in his name. Wife argued that she was entitled to an equitable share of both accounts. Husband contended that the pension should not be divided, and raised questions concerning whether the IRA was properly included in the marital estate.

Here’s the deal: If you want to protect your retirement assets, you must do so with a prenuptial or postnuptial agreement. 

In this case, the trial court applied a “coverture fraction” (also called a time rule) to calculate Wife’s share of Husband’s union pension. The court also determined that the IRA was part of the marital estate and awarded Wife a portion of its value. The court then entered a QDRO (qualified domestic relations order) to implement the division. The husband appealed, challenging both the pension division and the inclusion of the IRA as part of the marital estate. 

Outcome and reasoning

The question then became: Did the trial court err by applying the coverture fraction to divide Husband’s union pension, and was Husband’s IRA properly included in the marital estate subject to division?

In this case, the Court of Appeals affirmed the trial court’s judgment. Both the pension and the IRA were properly considered marital property and equitably distributed by the court. 

In Indiana, all the property you bring into the marriage is considered part of the marital estate. Indiana operates on a “one-pot” theory, meaning all property owned by either spouse—whether acquired before or during the marriage—must be considered in the marital estate  (Ind. Code § 31-15-7-4).

In addition, the appeals court found that the coverture fraction was fair and an accepted method of dividing a pension, because it accounted for the portion of the pension that was earned during the marriage while excluding premarital and post-marital accrual. 

In addition, Husband’s IRA was properly included because Indiana law presumes the inclusion of all property. Hence, the matter was decided in favor of Wife.

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