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Is it difficult to divide a pension during divorce?

Whether you know someone who has gone through a divorce or you are currently the one embarking on this life-changing adventure, chances are there were or are concerns about property division, and rightly so. Property division can be a complex part of the divorce process, oftentimes leading to disputes or disagreements that require professional legal help to resolve.

As many high-asset individuals will tell you, perhaps one of the most challenging parts of property division concerns pensions. Often considered incredibly valuable - perhaps even more valuable than the total sum of the community property - pensions create a unique challenge many high-asset individuals only address with help from a lawyer.

Is it difficult to divide a pension during divorce?

Yes. Pensions, as you may or may not know, do not function like defined contribution plans, such as a 401(k). With a pension, an employee is guaranteed an amount of monthly income upon retiring. As such, it's relatively easy to establish the value of a pension when it comes to divorce.

Unfortunately, knowing the value of a pension is only part of the property division process. A pension can present a number of challenges the pension holder may not have considered, such as:

  • An employer offering a lump-sum payment of a pension prior to the employee's retirement
  • A buyout offer from the pension holder's spouse
  • Bankruptcy or other financial troubles that reduce the pension
  • Taxes associated with the division of the pension

Why should you turn to a lawyer for help?

Just knowing that you could face similar challenges with your own pension during divorce is not enough to get you through the property division process successfully. As the Judicial Branch of California so aptly explains, "special rules apply to pensions... [that are] very technical and do not apply to any other kind of asset." In addition, you may be required to have your pension plan "joined" as a party in your divorce, which is a complex process that can pose particular problems for same-sex couples and those in domestic partnerships.

Knowing how to properly handle a pension during property division may not be intuitive to you, but it is for an attorney with considerable experience handling high-asset divorces. Seeking their professional services is never a bad idea. 

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