How pensions are treated during a divorce in California

Posted on Apr 14, 2017

Pensions, along with other marital property, may be divided between both spouses

With many people divorcing later in life, concerns about how ex-spouses are going to fund their retirements are rising. Especially if one spouse has not worked in some years, then he or she may worry that a divorce will mean a loss of access to the other spouse’s pension. In fact, many people wrongly believe that they have no right to a spouse’s pension. The truth is that in most cases a pension, even if held in name by just one spouse, can usually be divided between both spouses following a divorce, according to the Daily Breeze. Since a pension is often the biggest asset most married couples own, understanding how they are divided during a divorce is crucial for future financial comfort and stability.

Community and separate property

California is a community property state, meaning that assets and debts acquired during a marriage are considered to be the equal property of both spouses. While there are exceptions, this status means that both spouses have a right to an equal share of the value of the marital estate regardless of who actually purchased the assets or took out the debts.

According to the California Courts’ website, community property does not mean that all marital property is physically divided equally between both spouses. Rather, each spouse will get a roughly equal share of the net worth of the estate, including pensions. Furthermore, regardless of any personal agreements divorcing spouses may have come to, community property is considered the property of both spouses until a court order specifies how that property is to be divided.

Dividing pensions

When considering pensions, it’s important for divorcing couples to understand that the portion of the pension fund that can be divided between the spouses will depend on a number of factors. For example, the portion that was earned prior to the marriage or after the separation is generally considered separate property and, therefore, cannot be divided between spouses. The portion of the fund that was actually earned during the marriage, however, can be divided between both spouses as this part of the fund would be considered community property.

According to the Daily Breeze, the person with the pension could opt to pay the other spouse the share of the pension he or she is entitled to. Alternatively, a court can order that each spouse receive the amount of the pension he or she is entitled to later in life when the pension is set to be distributed.

Dividing retirement funds

The above is just a general outline of how pension funds may be divided under California law. Pensions can be subject to a number of exceptions and complications which make such funds unique during any divorce. As such, anybody going through a divorce should seek the help of an experienced family law attorney. A qualified attorney can help clients assess how their unique financial circumstances affect their divorce and how any retirement funds acquired during a marriage may be divided.

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