How courts treat pensions in divorce, Part 1Posted April 2010. Filed under Property & Financial Matters
If you have earned pension credits in a public or private pension plan, those benefits are probably one of your two most valuable assets—the other being your house. When you’re ending your marriage, the court is always going to pay particular attention to these assets.
When does a spouse get a share of the pension? As a rule of thumb, assets acquired during a marriage are divided evenly. In some cases where a marriage is of relatively short duration –say, less than two years— the cost of dividing the pension credits may be prohibitive. In all other cases, the court first determines what portion of the total pension benefit was earned during the marriage
How does the court determine how to divide the pension? It follows a basic formula: Figure out what part of the pension was earned during the marriage. That’s called the marital portion. The court then divides that portion in half.
Here’s an example: Say you had your pension for 10 years before you married. Now you’re ending your marriage after 10 years. You expect to retire in 20 years. That means 120 months or one-quarter of your 480-month pension benefit was earned during your marriage. That’s the marital portion. It will be divided in half—fifty percent to you, fifty percent to your spouse. The other three-quarters of your pension, earned before and after your marriage, is yours alone.
Is the marital portion always split 50-50? Ohio law generally says that marital assets are to be divided equally but courts can exercise discretion. In some circumstances, courts have been known to divide the marital portion differently based on many factors.
What if both partners have pensions? Each party shares in the marital portion of the pension of the other, just as above. The calculations can get complicated so you need to make sure you have counsel sophisticated enough to understand pension law. In general, however, courts will keep things simple by writing a separate order for the division of each pension.
So much for the basics. To really understand what will happen to your pension during divorce, however, you need to know what kind of pension it is. In Part 2 of pensions in divorce, I’ll cover the two most common types of plans.