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Can one spouse protect their pension during a divorce?

On Behalf of | Feb 5, 2025 | Property Division And Asset Preservation

People preparing to file for divorce or responding to service of a notice that their spouse wants to divorce often worry about their finances. They aren’t sure how much the divorce might cost, and they also worry about how the divorce might affect their standard of living.

People generally have to divide their property during divorce. However, some property is exempt from asset distribution because it is the separate property of one spouse. People trying to estimate their economic circumstances after divorce often benefit from identifying separate property and building their strategy from there.

Can a spouse who has earned pension benefits with their employer protect those resources as separate property when they divorce?

Some pension benefits might be separate property

Every marriage is different from the next. Factors including when the spouses married, when one spouse began acquiring pension benefits and whether they signed a marital contract can all factor into what happens with pension benefits in a divorce. A pension account is not automatically separate property, even if it is in the name of only one spouse.

Typically, any income or benefits acquired during marriage are marital property that spouses have to take into consideration when making asset division choices. Any contributions they made before getting married can potentially remain their separate property. In many cases, only a certain portion of the pension benefits an individual has earned is subject to division in a divorce.

If the spouses began the marriage with a prenuptial agreement in place or if they drafted a postnuptial agreement during the marriage, the terms of that contract may designate the pension as separate property. In such cases, the spouse with the pension can then protect it from division in the divorce.

Otherwise, people at least need to consider the economic value of the pension when making decisions about other assets during the property division process. It is sometimes necessary to divide a pension. People can also use alimony to balance out pension distributions during retirement. Other times, one spouse can use the value of the pension to influence other decisions regarding what debts they take responsibility for and what assets they retain.

Learning more about marital and separate property can help people prepare for complex divorce proceedings. If protecting a pension is a priority, spouses may need to adjust their divorce strategies to reflect their personal goals.

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