The number of people with pensions has been dropping for years. However, pensions are still a valuable asset in many long-term marriages. While in some cases, they can be easy to value and divided in divorce, in other situations, they require special expertise to ensure that each spouse’s rights are protected and each receives their fair share.
How Are Pensions Divided in Divorce?
Pensions are subject to equitable distribution in divorce, meaning they are assets that are split in divorce pursuant to New York law. They are passive assets, which means their value changes based on external market conditions. As such, they are generally divided equally in divorce. Active assets, such as a business, fluctuate in value due to the contributions of the owner, so the owner typically gets a great share in divorce under New York law.
Why Are Pensions Complicated to Split in Divorce?
Pension rights in divorce vary depending on the type and provisions of the plan, and when and how payments will be made. Payments to the divorced spouse can be made over time, or spouses can decide on a lump sum payment at the time of the divorce.
If a couple decides to pay the pension over time, some plans offer or require a separate interest division, while others a shared interest division.
In a separate interest division, a Qualified Domestic Relations Order (QDRO) divides the owner-spouse’s benefits into one part for the owner and one for the owner’s spouse as alternate payee. The owner’s spouse can decide when and how to receive payments.
In a shared interest division, the owner’s spouse shares in the payment of the pension benefits. A set amount or percentage goes to the spouse every month.
Selecting which one is best can be complicated. Relevant factors include:
- The amount of the benefit.
- Whether the money is intended to be used as spousal support or property division.
- The costs of valuing the pension.
- What the pension plan says happens to the benefit upon the death of the pension owner or spouse.
To avoid some of these issues, couples can opt to have the pension valued during the divorce action, then pay half of the valuation in a lump sum when the divorce is finalized. The lump sum option requires an expert to determine the value. Valuation is calculated based on the expected lifespan of the pension owner.
To ensure your rights are protected, it’s important to work with an attorney knowledgeable about these types of assets and who has experience working with pension experts. If you are considering divorce, contact us to learn how we can help you achieve a positive result in your case.The number of people with pensions has been dropping for years. However, pensions are still a valuable asset in many long-term marriages. While in some cases, they can be easy to value and divided in divorce, in other situations, they require special expertise to ensure that each spouse’s rights are protected and each receives their fair share.
How Are Pensions Divided in Divorce?
Pensions are subject to equitable distribution in divorce, meaning they are assets that are split in divorce pursuant to New York law. They are passive assets, which means their value changes based on external market conditions. As such, they are generally divided equally in divorce. Active assets, such as a business, fluctuate in value due to the contributions of the owner, so the owner typically gets a great share in divorce under New York law.
Why Are Pensions Complicated to Split in Divorce?
Pension rights in divorce vary depending on the type and provisions of the plan, and when and how payments will be made. Payments to the divorced spouse can be made over time, or spouses can decide on a lump sum payment at the time of the divorce.
If a couple decides to pay the pension over time, some plans require a separate interest division, others a shared interest division.
In a separate interest division, a Qualified Domestic Relations Order (QDRO) divides the owner-spouse’s benefits into one part for the owner and one for the owner’s spouse as alternate payee. The owner’s spouse can decide when and how to receive payments.
In a shared interest division, the owner’s spouse shares in the payment of the pension benefits. A set amount or percentage goes to the spouse every month.
Selecting which one is best can be complicated. Relevant factors include:
- The amount of the benefit.
- Whether the money is intended to be used as spousal support or property division.
- The costs of valuing the pension.
- What the pension plan says happens to the benefit upon the death of the pension owner or spouse.
To avoid some of these issues, couples can opt to have the pension valued during the divorce action, then pay half of the valuation in a lump sum when the divorce is finalized. The lump sum option requires an expert to determine the value. Valuation is calculated based on the expected lifespan of the pension owner.
To ensure your rights are protected, it’s important to work with an attorney knowledgeable about these types of assets and who has experience working with pension experts. If you are considering divorce, contact us to learn how we can help you achieve a positive result in your case.
