Beller Law, PL, can advise you about the legal considerations for pension division that apply to your circumstances. We have over 25 years of experience helping people through the arduous divorce process. Relying on our experience and knowledge, we can design a strategy that aligns with your priorities and helps you hold on to what is most important.
General Property Division in Divorce
When you marry, most property you earn or acquire becomes marital property, including:
- Salaries and wages,
- Real property,
- Investments, and
- Retirement benefits.
Some properties remain separate, however, like:
- Property earned or acquired before the marriage,
- Inheritances,
- Gifts, and
- The property of the spouses is established as separate.
When you divorce, you must divide your marital property equitably. If you and your spouse come to an agreement about how to divide the property, a judge will generally issue an order reflecting that agreement.
While “equitably” does not necessarily mean “equally,” the court assumes that dividing marital property equally is the fairest division. However, many factors can modify this assumption, including each spouse’s contributions to:
- The home and marriage,
- The career or education of the other spouse,
- The acquisition of assets and liabilities,
- Improvements to marital and nonmarital assets, and
- Intentional devaluation of property.
In addition, equitable division typically involves consideration of:
- Each spouse’s independent economic circumstances;
- How long the spouses were married;
- Interruptions to either spouse’s career or education during the marriage; and
- Reasons for one spouse to maintain specific assets, including the marital home.
When these factors are balanced, the end result may be an unequal, equitable division.
Pension Division in Divorce
Pensions are subject to equitable division, but dividing pensions can be extra complicated, especially when one or both spouses:
- Worked at the same job before and after getting married,
- Worked for a railroad company,
- Did not earn income for a time, or
- Worked for the local or state government.
These situations can contribute to many common pitfalls in pension splitting. If you make a mistake or error based on one of those common pitfalls, you may be locked into that mistake or error for years to come.
Pitfall Number One—Timing of Benefit Accrual
Only marital assets are subject to equitable distribution. So, when a spouse works the same job before and after getting married, only what the spouse earns after the official marriage date qualifies. And, once you officially agree to divorce, the property each spouse acquires is no longer marital property.
Calculating each spouse’s equitable share of a pension is frequently complicated by timeline issues. Calculations can become especially complicated because earning retirement benefits often depends on how long you work somewhere. Sometimes just figuring out what percentage of a pension qualifies as marital property to distribute assets requires the assistance of a qualified professional.
Pitfall Number Two—Homemaking Spouse
Sometimes, one spouse may have earned most or all the retirement benefits that qualify as marital assets while the other focuses on the home. Anyone who has spent time as a homemaker or the primary caregiver to children knows it is not an easy task. And the reality is that one spouse working as a homemaker sometimes makes the most financial sense to a couple, especially when childcare is involved. Yet, trying to quantify the relative contributions of each spouse when one was a homemaker can lead you to common pitfalls, resulting in serious errors or mistakes.
Pitfall Number Three—Spouse Worked for a Railroad Company
Another complication can arise if one or both spouses earned benefits working for a railroad. Railroad pensions and retirement benefits are governed by Federal law, along with Florida law governing how pensions and retirement benefits are divided in a Florida divorce. Because of the additional laws regarding railroad pensions, spouses need to have a better understanding of these pensions before discussing how they might be divided and the process involved in valuing and separating these assets.
Some courts may order the spouse with the pension to pay the other spouse directly. This means the first spouse receives the benefits and then has to set up a mechanism to transfer part of the funds to the second spouse. Alternatively, some courts may order spousal maintenance to represent a divided pension.
Pitfall Number Four—Spouse Worked for the State of Florida
Another complication can arise if one or both spouses earned benefits working for the State of Florida. Florida law declares that benefits earned by local and state employees cannot be divided, attached to, or assigned. In other words, the state will typically only pay the person who earned the benefits, not that person’s ex-spouse.
Because of the prohibition on dividing government pensions, spouses often have to get creative, offering alternatives to pension splitting to ensure overall asset division is still equitable. Dividing assets equitably can be especially complicated for career civil servants.
As with railroad pensions, courts may order the spouse with the pension to pay the other spouse directly or order spousal maintenance to represent a divided pension.
Fixing Mistakes in Pension Division
Unlike child custody or maintenance payments, you generally cannot modify the division of assets and liabilities after it is finalized. When you think about it, it makes sense since once you are no longer married, you will no longer get more marital assets. This rule applies to pensions with as much force as it does other assets.
Yet, pensions, as promises of future money, work differently than most property. If your former spouse is particularly charitable, you may be able to convince them to modify the terms of your divorce order or otherwise not enforce it. If you can prove your former spouse fraudulently concealed assets from you, you may also be able to reopen a case to have property re-divided equitably. And, if you pay spousal maintenance, you can generally request a court modify the maintenance order in changed circumstances.
Otherwise, you may be stuck with mistakes you made in calculating or assigning pension distribution.
Let Beller Law, PL, Help
Making mistakes when you value and divide a pension can be long-lasting and next to impossible to fix. Even those mistakes you can correct are often quite expensive to fix. Asset division is especially valuable to get right the first time since you cannot typically change a court order setting that distribution. The attorneys at Beller Law, PL, can help you understand the vital legal considerations for pension division and guide you through the property division process to ensure you do not pay for pension division mistakes years down the road. Contact us today.