how are pensions divided in family law

How Are Pensions Divided During Divorce?

Goldberg Jones Divorce, Finances, Goldberg Jones Radio, The Divorce Process Leave a Comment

Pensions are less and less common these days as fewer companies offer them to employees, but they do still show up during divorce. The attached question usually runs along the lines of, “I worked my whole life, can my ex really take part of my pension in the divorce?”

The short answer is yes. California is a community property state, thus the courts view a pension accrued during a marriage as shared property to divide in a divorce. That said, like many legal matters, it’s not always so simple. There’s math involved and the length of your marriage comes into play.

Caller Question:

“I was just wondering how a pension works? If one person has a pension, and the other doesn’t, do they get some of that or not until they start receiving it?”

Rick: “Is it truly a pension, or is it like a 401(k)?

Caller: He has both, but this is the pension.

Rick’s Answer

Rick: “Really good question, certainly over time, there’s fewer and fewer companies that offer pensions so we’re dealing with a whole lot less than we were ten and 20 years ago.

“A pension is looked at as community property as well. The only difference is that creates a little bit of complexity. Because on a 401(k) account, it’s a dollar amount, you can chop that in half so to speak. [But] when it comes to a pension, the number is unknown, especially if the person is still working.

“So let’s use this as an example, I’ll try to keep this simple:

“Let’s say a person gets 30 years of employment in, so it’s a 30 year pension. You were married for the first 15 of it. That means the pension would be divided 15 years into the marriage, so it’s still alive for another 15.

“But the way the formula works is it would have said: the community value is half the pension and the worker’s value is half the pension. So he gets all of that, but the 50% that was community then gets divided up.

“The simple answer, half of that. Meaning 1/4 total to the wife, 3/4 to the husband, and that gets paid when he is eligible to receive it.

Danny: Just to add on to that a little bit Julie, here’s what I think of how pensions work. I think they work like this: I work all my life and get a pension, then a woman I hardly knew divorces me and gets a bunch of the money!

[Background laughter erupts.]

Danny:That’s how pensions work Julie!”

Another example of the math:

40-year Pension.
10-year marriage.
Community property applies to 10 years, which is 1/4 the total pension.
Half of the value of the 1/4 is hers, which is 1/8.
So the pension earner gets 7/8, the non-pension earner gets 1/8.

One of our founding partners, Rick Jones, makes regular appearances on the Danny Bonaduce and Sarah Morning Show, where he answers family law questions from listeners. 

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