If you or your spouse has a pension, it might be subject to division during a divorce. Pensions are structured so that the recipient receives a set amount of money per month after retirement. This is different than a 401(k) plan, for example, where the recipient has access to a lump sum at retirement age.
It can be difficult to divide a pension in a divorce because many pensions have an indeterminate payout. You know that you will get a certain amount per month when you retire, but you do not know precisely what the amount will be until you actually retire.
If the pension is earned during the marriage, it will likely be a marital asset. For some couples going through a divorce, a pension can be a substantial portion of the marital asset to be divided and, depending on your situation, an expert may be used to assist in making an accurate determination of the present value of the pension.
The way the Court will treat a pension during a divorce will depend on a number of factors, including: the length of the marriage, the value of the pension, and how close the recipient spouse is to retirement.
The Court may value the pension based on a specific retirement age and divide it in a just and equitable manner in light of the parties’ other assets. The Court may also award each spouse a percentage of the pension and avoid having to value it based on a speculative retirement age. In that case, your divorce attorney will need to prepare a legal document called a Qualified Domestic Relations Order.
A Qualified Domestic Relations Order, or QDRO for short, splits and changes ownership of a retirement plan or a portion of the retirement plan to give one of the spouses after the divorce becomes final. Finally, the Court may also choose to reserve jurisdiction over the pension and equitably divide it upon actual retirement.
Regardless of how the Court chooses to divide a pension in a divorce, it is important to keep in mind that just because a pension cannot be collected until retirement does not mean it should be excluded from the property division process.
If you have questions about how you or your spouse’s pension will affect your divorce in Minnesota, the attorneys of Clausen & Hassan can help. With the help of an experienced divorce attorney, you can be represented fairly in court. Please, contact our office today at (651) 647-0087 or on the web at firstname.lastname@example.org.