What happens with pensions during divorce?

On Behalf of | Dec 28, 2022 | Divorce |

The division of net worth remains a challenge in any divorce. Often, splitting partners are unable to mutually agree on what should happen. Courts then step in to make hard decisions.

Pensions are an asset that separating spouses often fail to mull over. Consider the elements affecting what happens with these accounts.

What distinguishes separate property states from community property states?

States follow one of two protocols. Some, such as California and Louisiana, are community property states. Under this rule, divorcing couples must split everything equally.

Others, including Minnesota, are separate property states. This means partners leave with everything they earn during the marriage.

The exception is if the couple agrees on joint ownership. Such terms are sometimes written into a prenuptial agreement. These principles apply to pensions along with all other assets.

What factors determine how a pension gets divided?

Judges weigh the value of the pension, as well as the length of the marriage, to determine how much each person gets. How long the pensioner has until retirement also receives deliberation. Some may find it surprising that pensions are subject to split before the person retires.

What is a Qualified Domestic Relations Order?

A QDRO is an official document stating what will happen with a specific retirement plan. The order could command distribution according to dollar amounts. Otherwise, the break may be percentage-based. Another possibility is a deferral of a final ruling until the person is no longer working.

Every time a marriage dissolves, both sides have an interest in what happens to pensions. Understanding the decision points facilitates calm throughout the process and beyond.

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