Pension After Divorce

When a couple of divorces, they probably focus first on dividing up the property that it’s easy to see the home, furniture, cars, and so on. The property they can’t see-their intangible property-is also affected by divorce. Pensions are one kind of intangible property. For many families, a pension is the largest asset, after the family home. Even if the pension is earned solely by one spouse’s efforts, the portion of it that was earned during the marriage is still marital property subject to division by the court. 

Many courts prefer to give full rights to a pension to the party who earned it as long as the other party will have sufficient income and property from other sources. 

If, however, the pension is the primary source of income that a spouse would have and there are no other significant sources of income, the court is likely to divide rights to the pension. The court can divide the pension between the spouses by percentages (e.g., one spouse will receive 60 percent, the other spouse, 40 percent) or by a fixed cash amount to one spouse with the remainder to the other spouse (e.g., one spouse will get $600 per month, the other spouse, $400). 

Congress has passed a law facilitating the division of pensions. The law allows entry of orders by a court called Qualified Domestic Relations Orders. When properly entered by a court, these orders require the administrator of a pension plan to send pension checks not only to the worker but also to the worker’s former spouse. The court cannot order a pension check to be written before the worker is entitled to the pension, nor can the court change the total amount of the due pension. But the court can direct that when a worker is eligible for a pension (even if he or she has not yet retired and is not drawing a pension), checks must be sent to the worker’s former spouse. 

For example, if a couple is divorcing after a worker has retired, the court may order that pension payments be divided fifty-fifty (or by some other percentage). If the couple divorces while the worker is still employed and accumulates retirement benefits, the court may ascertain the pension value as of the date of the divorce and order division of that sum. When the worker later becomes eligible for payment of retirement benefits, the spouse could receive pension payments for a portion of the pension earned during the marriage. The worker would receive the remainder of the pension, including all of the pension that accumulated after the divorce. 

Qualified Domestic Relations Orders can be applied to pensions of most private employers. If a spouse has a military pension or certain government pensions, different types of orders with different types of forms may be required. Still, in most cases, the result can be the same: With a properly entered order by a court, the pension can be divided between the spouses. 

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