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Divorce and pensions: What you need to know

A divorce comes with many considerations, including child custody, child support, alimony and property division. One things that must be considered is how a pension will be distributed.

A pension earned while two people are married is considered marital property. However, it is not divided automatically; you must ask for your share during the divorce and not after your spouse retires.

A Qualified Domestic Relations Order is what the court uses to award you part of the pension. This order is then forwarded to the pension plan. The plan will want to make sure the court order has all the information needed to make sure the who, what, when and how much is identified. In addition, the plan administrator will be able to determine whether you are eligible for a lump-sum payment or regular monthly payments.

The QDRO should be settled before the finalization of your divorce. It is much more expensive and risky to try to get a QDRO after the divorce is final. You could even lose the money that was supposed to be yours.

If your spouse offers to trade you something for his or her pension, be careful. Your share could be much higher when collected than the value of the assets your spouse offers.

A QDRO is a complex legal document and it is advised that your attorney handle your request for your share of the pension. This way, you won't have to try to go back to court to get it modified at a later date because something was wrong. In this case, it is definitely better to be safe than sorry.

Source: Women's Institute For A Secure Retirement, "Pensions and Divorce," accessed Aug. 12, 2016

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Bulloch, Fly, Hornsby & Evans Attorneys At Law
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