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Category: Divorce & Family Law

April 21, 2023

Divorce, Pensions and Avoiding Pitfalls in Dividing Them

Vicki Viramontes-LaFree

A divorcing party may have acquired employer-sponsored retirement benefits during marriage. In most states, retirement benefits earned during marriage are marital property and can
be divided at divorce. A court order is required to transfer a share of an employee’s retirement assets to the non-employee spouse. This article focuses on private sector and civilian federal government defined benefit pension plans, those plans that pay a monthly annuity during retirement, the scenarios that can create problems for divorcing spouses, and what to do to avoid these problems.

Seven Scenarios to Watch out for:

  1. Employee-Spouse Is Working at Divorce and Retirement Is Far Away. A spouse may be working at the time of divorce and will be eligible for a pension at retirement, but retirement is many years off. A lot can happen between the divorce and retirement. The employee-spouse could remarry, and a new spouse could acquire pension rights. Or the employee could die before retirement, leaving the former spouse without survivor benefits. The work is not done when the divorce is granted. The spouse will need a court order to secure his
    or her rights.
  2. Employee-Spouse Is Working at Divorce and Has a Private Sector Pension. Many private sector pensions allow for two types of division at divorce; a separate interest division and a shared interest division. Some former spouses may benefit from getting a separate interest division. With a separate interest approach, the plan administrator splits the pension into two separate pensions, one for the employee (who can continue to accrue benefits after divorce) and one for the former spouse. The former spouse can begin receiving his/her pension without having to wait for the employee to retire. Moreover, survivor benefits become a non-issue because the spouse’s separate interest benefit will last until his/her death, even if the employee dies first.
  3. Employee-Spouse Is Working at Divorce and Has a Federal Government Pension. A former spouse must wait to receive his or her share of a federal pension until the employee-spouse retires. If the employee dies before the spouse, the spouse’s pension will end unless the court order granting a share provides for the survivor annuity. But the former spouse will forfeit the survivor annuity if he/she remarries before age 55. For a younger spouse, survivor benefits may not be worth fighting for.
  4. Employee-Spouse Remarries before Retirement. An employee may remarry and divorce again, may even remarry and divorce multiple times, leaving several former spouses. A spouse who is entitled to a court order dividing a pension must see to it that the order is entered and submitted promptly to the plan for implementation. Under the federal government’s pension provisions, whichever former spouse first delivers an order to the Office of Personnel Management is first in line to receive the pension benefits.
  5. Employee-Spouse Dies Before Retirement. Both the private sector and federal government pension plans provide death benefits. But without a court order approved by the plan administrator, a former spouse may not get the benefits he or she is entitled to. Again, getting the proper order entered and submitted to the plan is paramount.
  6. Employee-Spouse Retires Prior to Divorce. At retirement, a married employee must elect a survivor annuity for his/her spouse unless the spouse waives it in writing. An election for a spouse to receive survivor benefits is irrevocable, even if the parties later divorce. However, it is a good idea to get a pension order to confirm the nonemployee spouse’s right to the survivor benefits.
  7. Settlement on the Courthouse Steps. When a divorcing couple reaches a settlement regarding division of a pension on the day of trial, their lawyers will need to recite the terms on the record in court. The lawyers must state all necessary terms that will later be put into a written order. Any inadvertent omissions, such as omission of terms regarding survivor benefits, or of necessary technical terms, can create a dispute that must be resolved by a judge.

Avoiding Pitfalls in Dividing Pensions:

  • Disclosure of Pension Plan Benefits. Get documentation regarding a spouse’s pension plan benefits early in a case. Pension orders can be challenging to negotiate and draft. Both sides should have all the key information before starting the negotiations or heading into trial.

July 5, 2022

Postmarital Agreements in the DMV— Lessons from Recent Cases

Linda J. Ravdin

A postmarital agreement is a contract governing property and support rights between spouses who have no immediate intent to divorce; by contrast a separation agreement settles economic issues between spouses who expect to divorce. Some spouses may want to use a postmarital agreement to address property issues during an ongoing marriage. A postmarital agreement may […]

February 17, 2022

Treatment of Vermont Civil Union as a Marriage for Purposes of Divorce in Maryland

Pasternak & Fidis

In 2020, in a case called Sherman v. Rouse, the Maryland Court of Special Appeals had to decide whether a 2003 Vermont civil union, which pre-dated marriage equality, should be treated the same as a marriage for purposes of granting a divorce and related rights, including spousal support and equitable division of property. One aspect […]

October 7, 2021

COVID-19 and the Rise of Electronic Signatures

Pasternak & Fidis

Since early 2020, fewer face-to-face transactions have been possible because of mandatory social distancing. These restrictions changed the way lawyers and clients handled contracts and other business and personal transactions. The remote work environment reduced ink-to-paper signatures and increased the use of electronic signatures for contracts. Parties to a contract use the click of a […]

May 26, 2021

Lifestyle Analysis in Divorce

Vicki Viramontes-LaFree

In some divorces, the family law attorney may have concerns about an opposing spouse who is not forthcoming about income or the existence and value of assets.  In some cases, the attorney may need to use cash flow to establish the couple’s marital standard of living.  This article addresses these issues, highlighting a book by […]

December 17, 2019

What Divorcing Parents Should Know About International Travel with Children

Vicki Viramontes-LaFree

Many parents like to vacation with their children, to the beach, to a national park, to visit a big city. Some families travel abroad. Parents who are separated, or planning to separate, should include rules about traveling with minor children in their settlement negotiations. Parents can avoid disputes by agreeing to travel protocols in their […]

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