How to Keep Your Pension in a Divorce

pensions Sep 10, 2019

It may or may not come as a surprise to you that a pension is frequently the most significant asset divided in a divorce. With that said, it's not a foregone conclusion that you'll have to give up a portion of your pension as part of your divorce settlement. I'm surprised by the number of cases I see in which the parties decide the pension owner will retain it in its entirety.

How to keep your pension in a divorce

First, consider your overall financial picture. If you want to keep the pension and it's one of the more significant assets in your marital estate, you're likely going to be giving up other assets. What are you willing to give up in exchange for the pension?

To get a full financial picture, start by determining the value of the pension. Please note that this is not the value shown on the pension statement. A pension is valued by discounting the future benefit back to the present value. Keep in mind that only the marital portion of the future benefit is used...

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Dividing Pensions in a Divorce: Shared vs. Separate Interest

Dividing pensions in a divorce can be confusing. For starters, some clients that I see are often confused (even after negotiating their divorce settlement) regarding what type of retirement account(s) that they have. In this blog, I am referring specifically to defined benefit plans. Defined benefit plans are retirement plans where the employee spouse has earned a monthly benefit, which will be paid out once s/he retires. In some divorce cases, the employee spouse and his/her former spouse agree to divide the future benefit via a Qualified Domestic Relations Order (QDRO).

Unfortunately, most settlement agreements that I see where pensions were divided do not adequately address the options allowed by the defined benefit plan. To be clear, the options are not consistent across all plans. Thus, it does take some research to know what the options are before they can be considered. The easiest way to avoid some very common mistakes is to request a copy of the plan summary document and...

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How to determine which assets to keep in a divorce

Most of the time, when I sit down with couples preparing to dissolve their marriage, individuals assume that each account will be divided in half. Did you know that's not always the case? In states like Ohio, where the law requires an equitable distribution of assets in a divorce, it's important to remember that equitable is not always equal. If you have options, how do you determine which assets to keep in a divorce? Rather than ramble on about all of the issues to consider, let's take a look at an example of a couple with whom I recently worked. I will refer to them as Michelle and James and have tweaked the details so as not to divulge their confidential information.

An Example of Dividing Assets in a Divorce

James and Michelle were married for the last 18 years. Michelle is a teacher who has worked in a local Ohio public school district for 23 years. James has a job in IT in the private sector and has worked at various companies throughout his career. He has been with his...

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4 Dissolution Tips All Teachers Need to Know

pensions strs teachers Oct 11, 2017

Teachers, if you are in the process of terminating your marriage, these dissolution tips are for you.

Teachers hold a special place in my heart for many reasons. For one, early in my career, I was a teacher. I earned my Master's in Education and have made quite a few teacher friends over the years. Additionally, I had the pleasure of having some fabulous teachers throughout my education. My children have also been blessed with some wonderful teachers who truly care about their success.

Often, when I meet with teachers who are faced with the end of their marriage, they realize that they do not have a complete understanding of the family finances and their retirement benefits, in particular.  Many do not even realize that they have options when it comes to their pensions. Teachers, you are not alone! It is my passion to provide the education you need to feel empowered as you go through your divorce.

Here are 4 dissolution tips every teacher should know:

Get a ...

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What is considered separate property in a divorce?

I often have clients come in who are misinformed about separate property and which assets should be divided in their divorce. Since I'm in Ohio, I will use that as my example. Ohio is an equitable division state. That means that a couples' marital assets are divided equitably in a divorce. It's important to note that equitable is not always equal but I will come back to that in another post. The question, however, is what constitutes a marital asset. All else would be considered separate property.

Pensions in Divorce

I hate gender stereotypes but I see this all the time so I think it is worth calling it out. I have never once had a man come into my office and say, "She can keep her pension, she earned it" while I frequently hear from female clients, "He can keep his pension, he earned it." I'm hoping others working in the divorce field have not had that same experience.

The pension is commonly the largest asset of the marriage.  If all or a portion of the pension was...

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Valuing a Pension for Divorce is a Wise Investment

Are you losing thousands of dollars because of your financial fears during your dissolution or divorce?

The cost of the divorce itself is one of the biggest fears I hear from clients. There is no question. It will generally take longer and cost more than you expected. However, that does not mean it's a good idea to cut corners.

Valuing a pension for divorce: Don't cut corners

One frequent corner cut is a pension valuation. Pension valuations do not take a lot of time. However, they do require you to work with someone other than your attorney. Thus, even when recommended by their attorneys, many clients choose not to have them done.

It is not even necessary to meet with your valuation expert in person. All required information can be provided via phone/email. In some cases, the attorney can even provide all of the relevant information. I recognize that it can feel stressful and overwhelming to work with yet another professional and have yet another bill to pay. However, it could...

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