Protecting What Matters Most

Pensions can be complicated in a divorce

The dissolution of a marriage can be a difficult thing to deal with for New Yorkers. A divorce can bring all sorts of emotional baggage, and it can also cause plenty of financial entanglements as a divorcing couple sets about the task of splitting up assets. In a marriage where there aren’t many assets, divorcing is probably straightforward. In a marriage where there are considerable or complex assets involved, things are more complicated.

As an example, one divorcing couple shared 401(k)s of equal value, but the wife also had her own separate pension. Her spouse wanted to claim part of her pension. According to a divorce financial analyst, the wife’s pension would be included as part of the joint marital assets if that pension was accumulated during the marriage. Joint marital assets are to be divided between the divorcing spouses.

When it comes to dividing a pension, the present value of a marital portion of the pension first has to be determined. This can be a complicated process because pension plan statements don’t usually list out the present value of the plan; pension plan statements show what the future monthly income payment of the plan will look like. Once that future income payment is determined, a financial analyst can then go back and figure out the present value of the pension. The divorcing spouse is not entitled to the premarital portion of the pension. That spouse is only entitled to the marital portion, and that marital portion will be split equitably.

Dividing assets during a divorce can be complicated, especially when there are financial instruments like investments, pensions and 401(k)s to think about. New Yorkers who work with a family law firm that has experience working with these types of financial issues in a divorce may find it easier to obtain an equitable resolution.

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