When couples go through a divorce, some of the most important aspects to
consider are child custody, child support, alimony (or spousal maintenance),
and property division. When these couples think of property division,
they may most often consider physical items such as cars, their home or
homes, furniture, and other assets, including money. However, they may
not consider all “property” in the matter. This can include
things such as each spouse’s retirement plans, pension plans, and
any other defined benefit plan. For many, these items aren’t considered
at all, but failing to address them can end in an unfavorable result when
the divorce is finalized.
Not many couples are aware of how these types of plans affect a divorce
and what is divided. Between pension plans, retirement plans, and other
employment benefits, there are many factors to consider. At Chung &
Rancho Cucamonga divorce attorneys can help explain how these defined benefit plans are divided in divorce
in California. It is important to understand how they are divided, what
you should do, and how to move forward. Our team has provided the information
you need so you’re not caught off guard during the process.
Dividing Retirement Plans
During the division of the retirement plan, a qualified domestic relations
order (QDRO) will be required to show the ways in which the assets will
be divided by the two parties. This form can be used for division of thrifty
savings plans, 401(k)s, 403(b)s, employee stock ownership plans, profit-sharing
plans, tax-sheltered annuities, and more. Many of the plans detail how
the benefits are to be divided. Because California is a community property
state, it is most likely that the benefits will be divided 50/50 between
the amounts earned during the marriage.
In some cases, it is advisable to stop contributing to the retirement plan
as soon as one spouse files for divorce. Any additional contributions
to the retirement account would also be divided, and because divorces
can take months or even years to be finalized, the contribution amounts
can reach thousands of dollars depending on the financial situation.
Dividing Pension Plans
Pension plans are generally divided in either a reservation of jurisdiction
or a cash out. The reservation of jurisdiction is the most common way,
and makes it so the one spouse receives a percentage of each pension check
after the employed spouse retires. The amount would be determined by dividing
the number of years the spouses lived together as a married couple by
the number of years the employed spouse participated in the pension plan.
With a cash-out, an actuary will provide an evaluation of the pension plan
to determine a present value which would allow the employed spouse to
receive the entire pension plan with the other spouse receiving other
assets equal in value to what they would have received from the divided
Property Division in California
This is one of the more difficult areas of a divorce to endure because
it can become very contentious. It is important to understand how the
process works and how it can impact your divorce. When these plans are
defined and the spouses come up with an agreement regarding how the property
will be divided, it can be beneficial for all parties involved, as well
as eliminate some of the arguing between divorcing couples.
At Chung & Ignacio, we want to help you get through property division
as smooth as possible. We are aware of how difficult this can be for you.
Our Rancho Cucamonga divorce lawyers aim to keep you up to date on everything
going on your case and make sure your rights are protected during property
Call us today if you have questions regarding a defined plan and property division during divorce.