4 Tips for Protecting Your Retirement Pension in a Divorce

You worked hard to earn your retirement pension. When you divorce, a court could divide your pension with your spouse as a marital asset.

But you may have options for protecting your retirement pension. These options range from finding ways to exclude your pension as a marital asset to negotiating a settlement with your spouse.

Read on to learn how divorce affects a retirement pension and how you can protect what you’ve earned.

Property Division in a Michigan Divorce

Divorce judges use equitable distribution to divide property in a Michigan divorce. Equitable distribution means the judge does not need to divide property equally. Instead, the court divides property based on several factors, including:

• Needs of the spouses
• Length of the marriage
• Principles of fairness
• Source of the property
• Each spouse’s contribution to the property’s acquisition
• Age and health of the spouses
• Earning abilities of the spouses

Equitable distribution can result in the spouse with fewer resources and greater needs receiving more of the couple’s property in the divorce.

The only property excluded from the marital estate is premarital property. If you or your spouse acquired property before the marriage, a judge does not have the authority to touch it in the divorce.

4 Tips for Protecting Your Retirement Pension

A retirement pension is exactly the same as every other asset. If it gets included in the marital estate, a judge can divide it during the divorce.

You have a few options for protecting your retirement pension during your divorce, including:

1. Entering into a Prenuptial or Postnuptial Agreement

If you think about it before or during your marriage, you can reach an agreement with your spouse about the distribution of your pension. An agreement entered into before marriage is called a prenuptial agreement. An agreement entered into after marriage but before divorce is called a postnuptial agreement.

Either of these agreements can protect your retirement pension in a divorce. Just keep in mind that for the agreement to be enforceable, you can’t trick your spouse into signing it after you’ve already decided to get divorced.

2. Shielding the Premarital Portion of Your Pension

Your marital estate only includes your pension contributions after your marriage. Review your account statements and identify the portion, if any, of your pension that qualifies as premarital property.

If you married late in life, some or all of your pension contributions might have happened before your marriage. If you married young, most or all of your pension might belong to the marital estate.

3. Determining the Value of Your Plan and Negotiating a Trade

You can speak to a financial planner to determine the value of your plan. Instead of leaving the distribution up to the court, you can propose a settlement where you trade another asset or cash for your spouse’s share of your retirement pension.

4. Consulting a Divorce Lawyer

These suggestions apply to most situations, but your situation might be different. You might have additional options for protecting your retirement pension based on the type of plan you have and how you funded it.

To discuss your retirement pension and your options for protecting it in a divorce, contact Gucciardo Family Law for a free consultation.