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How Are Retirement Benefits & Pensions Divided In a California Divorce?

If you are getting a divorce, you may have questions concerning your property and how the court will decide who gets certain assets. California is a community property state, meaning that all marital property owned by a couple is divided evenly in the event of divorce. Marital property can include anything from the home, vehicles, savings, investments, and even retirement accounts and pensions.

How does the court determine how to split benefits?

Retirement benefits are considered a form of employment compensation, similar to regular earnings. When a couple gets married, these benefits are considered marital property from this point until the date the couple separates. Let's say that you have been paying into a retirement account for 320 months and are married for 160 of those months. That would mean one half of the benefits are community property. Your spouse has a right to half of that one half, or 25% of the total retirement benefit amount.

Additionally, many retirement accounts are governed under federal law, not state law. In order for the court's divorce order to be legitimate, it must be a Qualified Domestic Relations Order. This must lay out the amount of benefits that are to be paid out, how they will be determined, and the number of payments this applies for.

Should I keep the entire pension and give up other property?

The current value of the account needs to be determined before this can be answered. Many times this is done by an actuary who will work to estimate inflation amounts until the date that the retirement account will be paid out. You may need to consider the size of the pension compared to other community property. If keeping the pension will prevent you from accessing other important assets, it may be worthwhile to divide this account with your spouse instead of keeping it as your own.

Obtaining pension benefits may not be as big of a payout now as in previous years. With many large, pension-granting companies claiming bankruptcy, their employee's pension benefits have taken a significant hit, providing only a fraction of the earned benefits. It may be better for both spouses to shoulder this loss.

If you have a retirement account and are wondering how you will be affected by divorce, it would be wise to speak with an experienced Burbank divorce attorney about your options. Call our offices today!

Categories: Property Division


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