Schank & Associates

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Pension Division

It is one of the first questions to be asked by people considering or going through a divorce: who gets what? And a huge part of that involves the division of pension plans or retirement funds. Many worry that husband or wife will take their retirement entirely during a divorce, or enough of it to prevent a restful life after work. Sometimes, these plans can value more than all other shared property combined. Thus, pension division is an extremely important part of dividing property, especially if one spouse worked and the other stayed at home during the majority of the marriage, since the latter was not able to save up a retirement fund. Both sides can be placed under stress during this, since divorce is never easy in the first place and the financial side of it is intricate, confusing, and headache-inducing. Understanding California pension division relies on understanding community and separate property laws, different retirement and pension plans, and financial formulas. Thus, while we provide basic information regarding retirement division in California, this is not intended to be specific legal advice. Your situation may require completely different action steps, and the details within each step depend heavily on your financial background. Please consult with a divorce attorney who specializes in pension division before going through the process.

Pension division can happen one of two ways, as typical with divorce or legal separation. Either your spouse can come to an agreement on your own, or the judge will decide for you based on a number of factors. If you both decide that you want to divide the pension together through negotiation, you can draft an agreement (often a section of the property settlement specific to pension division) that outlines exactly how the pension will be divided between the two of you. This could include (but is not limited to) the amount that each party gets, the date they will receive the funds, how the funds will be delivered, any benefits that are included in each portion, and so on. Never sign off on any agreement without having a pension division expert review it. Any promises you attach to your signature will be held over you in the future and being fully aware of the repercussions of each decision will drastically reduce your chances of being taken advantage of after you stop working. We want you to have the comfortable and fulfilling retirement you deserve and will ensure that your rights are fully protected during the pension division process.

Unfortunately, due to the heated nature of pension division, it is typically a highly contested issue and many couples are not able to go through the route of mediation. In that case, pension division will still be roped into the process of dividing all your property, yet the judge will now have full decision-making abilities over how the pension is divided, and your right to negotiate or request changes will be very limited. How the judge calculates pension division depends on a number of factors, which we discuss further down.

Whichever process you follow, there are a several pension division forms that you must fill out and submit to your county court system. There is a chance that different counties can require different pieces of paperwork, so call one of our law firms near you to speak with a pension division attorney on any county-specific laws. Out of all these forms, the most intimidating one is the QDRO – Qualified Domestic Relations Order. The main reason this document is so daunting is because there is no California-specific form that you fill out. Rather, it depends entirely on the nature of your pension or retirement plan and your employer’s requirements. It will ask detailed information regarding your employment, amount included in your plan and the time when the funds began accumulating, date when the funds are available, whether the fund will be given to you in payments and the timing of those payments, the length of the marriage, etc. Making an error on this form could have drastic consequences on your finances, so please do not hesitate to call us for a free consultation before you begin filling this out. We do not want you to lose your hard-earned money and will work tirelessly to ensure that each detail is filled out correctly on every single form and that your rights are upheld.

The way a judge will calculate your pension division changes for every individual case, but it depends on a few similar things.

First, the judge will divide your pension based on community and separate property laws. In California, all property gained after the date of marriage is considered “community” or shared property, including retirement plans. Thus, the judge will look at the length of the marriage and the amount of pension the working spouse accrued during this time to determine which portion the non-working spouse is entitled to.

To divide the pension, the judge will use the “Brown” formula. This formula was established in the 1970s as part of the divorce of Gloria Loucille and Robert Brown. This was the time when the state of California decided that pensions should be included in property divisions during divorce. They then came up with this formula, also called the Time Rule Formula. There isn’t really a difference between the Brown and the Time Rule formula, except that the former is slang and the latter is the official term. To put it simply, it is a fraction of the employee’s total length of service divided based on their employment from marriage to separation. Thus, pensions are not always split 50/50, but rather depend on the length of the marriage. You are typically required to provide the formula and do the calculations in the QDRO. While the math can be confusing, setting up the formula is what gets really difficult. Allowing a pension division divorce attorney to review the formula for errors will safeguard your assets.

We understand that you wish to protect your pension in your divorce. After working for years to save for retirement and having large portions of your salary being placed into a fund to prepare you for a comfortable future, having that threatened is incredibly stressful. There are alternatives to pension division in California, which typically rely on other assets you can use to negotiate. Through years of innovative negotiations, our divorce attorneys have helped dozens of clients keep the majority or even the entirety of their retirement funds in exchange for less valuable items. Give us a free call today to explore your numerous options and recruit meticulous legal aid.

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