DIVIDING A PENSION IN DIVORCE

Couples going through a divorce or legal separation action in California will frequently have to deal with the issue of dividing the community property interest in one or both spouses work related pension plans. These plans are also often referred to as Defined Benefit Plans.

A pension plan is one where the employee will receive a set monthly payment after retirement for the rest of his or her life. The community will have an interest in the retirement benefits that were earned during the marriage.

An employee's benefit is based on several factors. These factors are usually, the age at retirement, the amount of years employed and the employee's last salary.

The important thing to keep in mind is the fact that these pension payments will be paid for the rest of the employee's life.

The Court must determine the value of the pension at the time of the divorce. This will usually require that the calculations performed by an expert know as a Forensic Actuary. The calculations will show what the present value of the pension is based on the length of the marriage, the current salary of the employee spouse and their remaining life expectancy.

When the parties know the value of the pension, they can agree to divide other assets so that all their marital property is equally divided.

The more common alternative, is for the Community Property pension to be equally divided. Each spouse will be entitled to receive one half of the community value in monthly payments upon the retirement of the employee spouse. This is usually done with a special document called a Qualified Domestic Relations Order (QDRO).

A QDRO simply orders the employee spouse's pension plan to split the value of the pension earned during the marriage and to create two plans. The first will be the plan for the employees spouse. The second benefit will be for the employee's former spouse.

It is very important that each spouse protects their pension rights by a property prepared QDRO. This document must be signed by the Court and provided to the Pension Plan.

Please make sure to consult with an experienced Family Law Attorney if you have any questions about dividing a pension in a divorce.