As an individual who has been committed to their profession for a significant time, you’ve earned your pension benefits. And these benefits can provide a substantial amount of financial support as you head into retirement. If you’re going through divorce, though, then you might be worried about how your pension will be handled during the property division process.
This is understandable. Generally speaking, you’ll have to divide the marital estate with your spouse, which puts your pension on the line. But there are ways to ensure that you’re protecting your pension benefits as much as possible. Let’s look at what you should know so that you have a better understanding of how to approach the matter in your divorce.
Key considerations when dealing with a pension during divorce
We know you have a lot on your plate as you navigate the divorce process, but you can’t lose focus of your pension. Here are some aspects of your marriage dissolution that you need to keep in mind as you address your pension benefits:
- Know how state law applies: First, it’s imperative that you understand how property division works, particularly in the context of retirement assets. After all, if you try to divide retirement assets during divorce without submitting a Qualified Domestic Relations Order, then those assets can be subjected to significant taxation and penalty. So, be sure to review the law and how it might impact your approach to pension division during your divorce.
- Recognize that your pension doesn’t necessarily have to be divided: Although your spouse may indicate an intention and a desire to gain access to your pension benefits, there may be negotiation strategies that you can utilize to shield them. For example, if your spouse really wants to keep the marital home, then you might be able to use that asset as leverage to keep your pension benefits. Another option would be to purchase a life insurance policy with a payout amount that is similar to your pension benefits with your former spouse named as the beneficiary. Get creative here to see what sort of outcomes are possible to protect your best interests.
- Understand the terms of the pension: If you’re going to end up splitting your pension with your spouse, then it’s important to review the terms of the pension, as simply saying that you’ll divide it in half may not be as simple as you think. For example, if your pension has survivor benefits, then there’ll probably need to be a discussion about whether your spouse wants a lump sum payment or if you can convince them to maintain those survivor benefits so that you don’t have to pay any additional sums.
You don’t want to simply give up and give in when your pension benefits are on the line, so be sure to have a strong understanding of the options available to you so that you can make the fully informed decisions that position you for the best post-divorce life possible under the circumstances.
Do you want to learn more about how to deal with retirement assets in divorce?
If so, then please continue reading up on the subject and check out the rest of our website. Don’t minimize the importance of dealing with these assets in your marriage dissolution. If you do, then you could be left without the financial resources you need and deserve. Don’t let that happen to you. Instead, be proactive in developing the divorce legal strategy that’s right for you.