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Can you divide a pension during a divorce?

On Behalf of | Jul 7, 2023 | Divorce |

Both you and your spouse are close to retirement age, and you were looking forward to this next phase of your life. Perhaps you haven’t worked or haven’t saved for retirement in an employment-related account, so both of you were going to live off of your spouse’s pension.

But a complication has arisen, in that your spouse has recently asked for a divorce. If you end your marriage before they retire and start getting those pension payments, does that mean that you will lose your entire retirement plan? You know how big of a problem that would be, because you clearly can’t go back 30 years and begin saving for retirement. Those choices have been made, and now your spouse is going to leave the relationship and take the pension with them… or will they?

Using a Qualified Domestic Relations Order

If you’re worried about this kind of outcome, you’ll be glad to know that you may be able to divide the pension using a Qualified Domestic Relations Order (QDRO.) This is official paperwork that can be set up during your divorce.

This paperwork will lay out a framework for how the pension will be divided in the future. If your divorce is contentious, the court will consider things like how long the two of you have been married, what your financial situation looks like and (especially) the percentage of the pension earned during your marriage. If you and your spouse work out an agreement without judicial intervention, you can divide the pension in any way that is mutually agreeable to you both. Remember that assets acquired during marriage are shared marital assets, so a pension plan earned at that time is still a marital asset.

You wouldn’t get anything right away with a QDRO, but you would know that you were going to get a percentage of those pension payments in the future. Since the order would tell you the percentage, you could then consider what your future budget would look like and what this will mean for your retirement. You should not lose the entire value of the fund simply because your spouse asked for a divorce.

Situations like this certainly can get complicated. Make sure you know about all the legal steps to take in order to preserve your property interests as your divorce unfolds. Seeking legal guidance is a good place to start.