I’m getting a divorce. Is my pension safe?


If you’re ending your marriage, you’re likely wondering what will happen to your assets, specifically, your pension. Under California law, a pension earned by one partner is generally considered to be community property, which means that it may be subject to division during the divorce process. That may not be the ideal outcome for you or for your spouse. However, there are ways you can protect your pension throughout the divorce process. Here are some common ways you can protect your pension:

1.   Prenuptial agreement.

If you have a prenuptial agreement in place, it can help protect your retirement benefits and pension. A prenuptial agreement is a contract between two people prior to a marriage that covers how their property is managed. When you include your pension in your prenuptial agreement, it can protect it from being divided 50/50 with your spouse in the event of a divorce. If you did not get a prenuptial agreement in place, that doesn’t mean you have to take your divorce to court. There is an opportunity to create a postnuptial agreement or a settlement with your spouse leading up to your divorce.

2.   Settlement.

If you don’t have a prenuptial agreement in place, there is still the opportunity for you and your spouse to reach an agreement. California law allows spouses to enter into agreements that spell out how they want to divide their community property. If you want to keep your pension, consider offering your spouse other assets. For example, you may want to give your spouse ownership of your home or purchase a life insurance policy naming your spouse as the beneficiary. The goal is to offset what your spouse would get from the pension with something else.

If you want to come to a settlement agreement regarding your pension plan, you should speak with a financial professional to make sure you understand the value of your pension. Because pension benefits are paid in multiple ways and are often paid in the future, it can be very difficult to calculate the value without the help of a professional.

It’s also important to consider what retirement benefits your spouse has. If you both have a pension or other retirement accounts of similar size, it can be simplest to each walk away with what you already have.

3.   Speak with a Professional.

Regardless of your situation, it’s important to consult a financial and legal professional. Each pension plan has unique details on how the plan is paid out and whether or not a survivor’s benefit is offered. It’s important that you understand how your plan works because that affects how the pension should be divided up as part of the divorce. If your plan does offer survivor benefits, you may be able to persuade your spouse to maintain that benefit instead of getting a lump sum.

In addition to understanding how your plan works, you’ll also want to understand how a court will divide your property in the event you are not able to come to a settlement and don’t have a prenuptial agreement. If your divorce goes to court, the court must make sure that each spouse receives their full community property share of all assets, and this includes retirement benefits.

It’s important to understand which of your retirement plans, including your pension, cannot be divided without a Qualified Domestic Relations Order, also known as a QDRO. A QDRO is a special type of court order that recognizes that a spouse is entitled to receive a predefined portion of the account owner’s retirement plan assets. This document will be part of your settlement or final judgment.

Finally, remember that in most cases, military and government pensions have a separate set of rules from other pension plans and, therefore, should be treated differently from other pensions throughout the divorce and settlement process. An experienced divorce attorney can help you find the best ways to handle your various pensions and make sure you understand your options and are confident in the best decision for you.

Getting a divorce can be a challenging process, especially when complex financial matters such as pensions are involved. You don’t have to go through the process alone. An experienced divorce attorney can guide you through the process to make sure your pension is protected, and your assets are divided in a way that is beneficial to you. Never wait to reach out to a legal professional who can assess your situation and help you achieve your financial objectives.