Pensions and Divorce
Representation by a Northern Virginia Divorce Attorney
As part of a divorce in Northern Virginia, one of the assets that will be reviewed and perhaps divided is your pension. Your pension may be one of the most valuable assets in your marital estate.
When addressing a pension in the midst of a divorce, there are a few things to keep in mind:
Is Your Pension Marital or Separate Property?
The first issue is what, if any, portion of the pension was earned during the marriage. This is referred to as the "classification" of property. Is the pension your separate property (earned before the marriage, or after the separation), marital (earned during the marriage), or hybrid (which is part marital and part separate)?
Any portion of the pension which was earned during the marriage may be divided by agreement of the parties or by a judge. It does not matter that only one party earned the pension or that the pension is only in one person's name. If the pension, or any part of it, was earned during the marriage it's marital and subject to division. However, if the part of the pension was earned prior to the marriage or after the date of separation, it's hybrid property. An example of this is if one spouse had been working for an employer who offered a pension plan prior to the marriage. In that situation, the pension is hybrid property and the part of the pension that was earned prior to the marriage is their separate property and not subject to division.
If a spouse retired prior to the marriage, the pension is likely their separate property as they were not contributing to the pension during the marriage. Likewise, if a spouse was already receiving pension payments or benefits at the time of marriage, the pension is likely separate property.
Dividing Marital Interest
Once you have classified the property, the next issue is how to divide the marital interest in the pension. Virginia is an 'equitable distribution' state, which means there is no specific formula or percentage that will apply when it comes to the division of marital property. Instead the Court considers a list of factors in determining how the divide property if you are not able to reach an agreement on those issues outside of Court. Although the Court has the ability to divide marital property in any proportion as they wish, in most cases marital property tends to be divided equally between the parties.
The court, absent an agreement of the parties, cannot award more than 50% of the marital shares for pension to the spouse that not did not actually earn the pension. This can mean that each asset is divided equally to the extent you are able to do so or that the value of the marital estate is divided equally which can include offsets here and there for different assets. When determining how to divide the marital component of a pension in Virginia, we have to determine what the "marital share" of each pension is. The martial share is a formula that calculates the percentage of the pension that was earned during the marriage.
The actual division of the pension is accomplished by a court order that instructs the plan administrator how to divide the pension. In addition, there may be pre-retirement death benefits that can be assigned to the non-owner spouse, as well as survivor benefits that will continue pension payments of the owner spouse dies first.
It is important that you discuss these issues with an experienced Northern Virginia divorce lawyer. At ShounBach, we are experienced in the division of private, government and military pensions and are ready to help you figure out this complex area of law.
Pensions and Qualified Domestic Relations Orders
Pensions earned during the marriage are usually divided by the court in a divorce. Most often, the marital portion is equally divided. When this is done, the court enters an order instructing the plan administrator to divide the pension benefits. Depending on the type of pension, these orders can be called Qualified Domestic Relations Orders (QDRO) when dealing with private companies, or a Court Order Acceptable for Processing (COAP) when dealing with the division of a government pension, such as CSRS or FERS.
This order instructs the plan administrator to divide the pension and, if possible, send a monthly check to both the former spouse and the retired employee. This way, the former spouse is not dependent on the employee spouse to send a check each month; keep in mind, however, that direct pay is not available in all circumstances and is fact dependent. With some pensions, if the employee spouse dies first, usually the pension payments will stop. However, some plans offer the option of survivor benefits, which are like insurance – if the employee spouse dies first, the pension payments continue (although usually in a reduced amount) to the former spouse.
There is a cost associated with this protection, and how that cost is allocated between the parties can be decided by the parties or a judge. Keep in mind that each pension is different and each has its own rules and regulations regarding how they can be divided and what options are available to the former spouse and the employee. It is crucial that you work with an attorney who understands the complexities in dealing with various pensions and can guide you through the process and protect your interests along the way.
To learn more about how your pension, or your spouse's pension could be affected in a divorce, contact a Northern Virginia divorce attorney today at (703) 988-7627.