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How difficult is it to split a pension in a California divorce?

Aside from the family home, retirement accounts are commonly considered one of the most valuable assets an individual can own. With so much on the line, it’s no wonder dividing a pension often results in contentious disputes during divorce proceedings.

In California, however, it’s not just a pension’s value that can lead to property division disputes. The very nature of a pension makes it a complex asset, which can mean a lot of work during property division proceedings. Oftentimes, the inclusion of an attorney is necessary to ensure the clear explanation of how to successfully divide this type of retirement plan.

So what makes dividing a pension so complex? Let’s take a look.

Looking at when the plan was acquired

In a California divorce, property is divided according to community property rules. Basically, anything acquired before the start of a marriage is considered separate property while anything acquired during the marriage is considered community property.

Community property is divided equally, which is why it’s important to determine when a spouse made contributions to a pension plan. Any contributions made prior to marriage are separate property. Any contributions made during marriage are considered community property and must be divided according to California law.

Valuing a pension plan

As is expected, the future value of a pension needs to be taken into consideration in order to divide it equally in a divorce. Unfortunately, pre-marriage contributions add a layer of complexity to the valuation process. It’s best to speak with someone familiar with how pensions work and has experience dividing them in divorce proceedings in order to ensure valuation is accurate.

The type of plan matters

Further complicating matters is the fact that certain pension plans need to be “joined” as a party in the divorce. Two types of pension plans specifically mentioned by the Judicial Branch of California as falling under this rule include:

  • Government plans for the state, a county, public school, university or other public agency
  • Qualified and non-qualified plans for business owners and church employees or their spouses

Other pension plans may also fall under this rule, which is why you should speak with a legal expert regarding your plan.

A QDRO is needed

A QDRO, or qualified domestic relations order, is a necessary part of property division in California when a pension is concerned because it details to the court how the pension plan will be divided.

Under state law, a QDRO has to be “approved by both the benefits provider and the judge to assure that the spouse/partner that is not the employee of the company or organization will receive those future benefits.” These documents are “extremely complicated,” explains the California Courts, and they need to be prepared by someone with intimate knowledge of the law.