A pension is a source of long-term financial stability. Professionals who work for companies for years make contributions toward a pension fund and accrue pension benefits. When they retire, they receive regular payments that help replace their usual wages.
Those planning for retirement often consider not just their own resources but also the savings and benefits of their spouse. Is a pension accrued by one spouse potentially divisible in the event of a divorce?
Marital contributions may be divisible
People sometimes have careers that outlast their marriages. They may have started a position before getting married and may continue working for the company long after they divorce. In such cases, only a portion of the accrued pension benefits may be subject to division during the divorce.
Especially if the divorce occurs long before the spouse qualifies for pension payments, actually splitting the pension may not be practical. There is a legal tool that facilitates the division of a pension. In some cases, submitting a qualified domestic relations order (QDRO) may allow for the actual division of pension benefits.
Other times, the simplest solution involves calculating the amount of pension benefits accrued during the marriage and factoring that figure into the broader property division process. Home equity, a 401(k) and other valuable resources could balance one spouse’s retention of a pension in a divorce.
Reviewing household financial records with a skilled legal team can help people understand their options when their marital estate includes a pension. Spouses can request the division of a pension or make strategic attempts to preserve a pension by agreeing to compromises for other details of the property division settlement.