Serving Rome, New York residents with legal issues

Pensions and offset strategies in divorce

by | Mar 14, 2017 | Division Of Pensions

Pensions are an important part of a person’s retirement plans, especially if they have been working for quite some time. Pensions can be earned by local, state and federal employees after so many years on the job. Employees who earn pensions might have to share that pension with their spouse should they file for divorce.

Even in today’s world, more than twice as many men as women have pension benefits and the benefits for the men are typically much larger than those for women. Because of this, women find themselves in a situation where they can trade assets for part of their spouse’s pension when divorce occurs or vice versa.

If either party has enough assets they could decide to trade the pension for another asset, such as a mutual fund, a trust or property. This could wind up being more beneficial for the two parties than putting together a Qualified Domestic Relations Order (QDRO). This could also turn out to be more financially beneficial than the two parties sharing the pension.

If the non-employee spouse knows the present value of the pension at divorce, he or she can use it to obtain a cash out during settlement negotiations. This means that the non-employee spouse could be awarded a lump sum of cash, or another type of marital asset of equal value, when the divorce becomes final. This would be in exchange for the employee spouse keeping the full pension benefits when the divorce is finalized.

Before deciding to divide a pension 50/50, or trade it away for another type of marital asset, you need to think things through as much as possible. Disparate results can occur with a 50/50 split due to various factors that include the ages of the employee spouse and the non-employee spouse being different in most cases. Should both spouses have pension, each person can use it to his or her advantage to acquire another asset in the divorce.

An experienced divorce attorney in Oneida, New York, can answer all of your questions about pensions and divorce.

Source: Pension Analysis Consultants Inc, “Pension Valuation Tutorial,” Mark K. Altschuler, accessed March 14, 2017