How are pensions divided in a divorce?
- Annette Benson Law
- Last Updated:
- Property Division, Pensions
There are many different types of assets that couples acquire during a marriage. These assets can include homes, vehicles, bank accounts, investment accounts, retirement accounts and other types of assets. If the couple divorces all of these assets need to be divided. How they are divided depends on the type of asset though. Some may need to be sold and the proceeds divided, others can be divided by simply splitting the amounts in an account.
Dividing other types of assets can be a little more complicated though. One of these types of assets are pensions. These are not as common as they once were, but many companies and/or unions still have them. What makes pensions unique is that people generally cannot access the benefits until they retire. Also, instead of having access to the entire amount in an account, people receive a defined amount per month based on the terms of the pension plan.
Methods for dividing pensions
As the proceeds cannot be accessed in any way until retirement there are two different methods for dividing pensions. One is that the couple can divide the monthly payment received once the spouse retires. This is usually accomplished by using formulas to determine the anticipated monthly benefit and what portion of it the other spouse will receive after retirement. The other option is that people can determine the present value of the pension benefit and the spouse could pay the other their portion through other sources other than the pension itself.
There are many couples in the Detroit that divorce each year. There are many aspects of their life that must be split into two separate lives. This includes dividing all of the assets they acquired during the marriage. Property division can be a complicated process though. Couples will need to go through the process of valuing the property and assets, determining what is marital and non-marital and then splitting those assets. Experienced attorneys understand the property division process and may be able to guide one through the process.
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