Distribution of Pensions in Golden Age Divorces
Divorce and Pension Attorneys Ocean and Monmouth County
Distribution of property, as well as pensions, can be critical problems that will need to be overcome, Consult our attorneys in towns including Toms River, Brick, Sea Girt, Asbury Park, Wall, Manasquan, Neptune, Spring Lake, Brielle, and more
According to a recent study conducted by the National Center for Family & Marriage Research, the rate of divorce for individuals 55-64 years of age has more than doubled since 1990 and the rate has tripled for those 65 years of age and older. Those going through a ‘golden age’ divorce face different challenges than those who may be facing divorce at a younger age given that it is uncommon for children and parenting time to be an issue.
As with many family law questions, there is no universal solution regarding pension distribution. The way a former couple’s marital assets are split can often depend on a variety of factors. Typically, retirement accounts are one of the largest assets distributed between spouses following a golden age divorce. It is critical to note that pensions, 401ks, 403Bs, traditional Roth IRAs, deferred income, as well as any other monies that are allocated for retirement are subject to the provisions included in New Jersey’s equitable distribution statute.
What you need to know about the distribution of Pensions to Divorcing Parties in New Jersey
New Jersey’s equitable distribution statute requires that each party in a divorce receive a portion of the marital assets. This is regardless if the asset is registered in one spouse’s name alone or in joint names. This includes any pension or other retirement accounts. Only the portion of a retirement benefit that was accrued from the date of marriage thru to the date of the complaint for divorce, also known as the coverture period, is subject to equitable distribution. The portion of a retirement benefit/plan that predates the marriage or was contributed after the complaint for divorce is filed, are usually exempt from distribution.
These accounts are typically divided using a Qualified Domestic Relations Order (“QDRO”). Put simply, a QDRO is a court order that directs the administrator of a pension or other retirement asset to distribute a portion of the account to another party following the dissolution of a marriage. A QDRO will typically provide a formula used to determine the participating spouse’s vested interest or accrued benefit in a pension or other retirement plan. This agreement must be signed by a judge and should be negotiated by the divorcing couple through their respective attorneys.
Before entering into a QDRO several factors must be considered:
- Due to the fact that each individual’s situation can change unexpectedly, an alternate payee has the best chance of ensuring that the full benefit to which he or she is entitled is actually received in the future during QDRO negotiations. This formula will then be used to determine when an alternate payee is eligible to begin receiving payments from an ex-spouse’s pension.
- It is common that the parties in a divorce not to have the ability to choose the commencement date of pension or other retirement payments for the non-participating spouse in a negotiated QDRO. Instead, the alternate payee might be required to wait in order to receive pension payments until the participating spouse reaches specified retirement age. As a result, any future cost of living adjustments and the effect early retirement payments or subsidies may have on a non-participating former spouse’s rights need to be negotiated by an experienced and qualified attorney before the divorce case is finalized and also before a QDRO is submitted to a family law judge.
- A well-negotiated QDRO should firmly establish the effect a potential pension loan may have on the non-participating spouse’s share of the retirement funds. Through effective negotiation, a QDRO should preserve each party’s right to their retirement benefit.
- Pension rights of survivorship are another critical factor to be considered following a golden age divorce. For example, what will happen to the alternate payee’s benefit should he or she pass away after the commencement of pension payments? Moreover, a non-participating spouse must be careful to protect his or her interest in a former spouse’s pension in the event of the participant’s death. These factors should be included in the initial agreement due to the fact that doing so after a QDRO is entered by a court can be very challenging.
Needless to say, a golden age divorce can be a complicated affair for many years following the dissolution of the marriage. What is agreed upon during the initial QDRO is critical to securing your financial future going forward. It is highly recommended to have experienced and effective legal representation before, during and after the divorce process.
Consult a Monmouth Attorney to Help you Manage the status of your Marital Assets
Peter J. Bronzino, Esq, is highly skilled in supporting our clients’ divorce proceedings in Asbury Park, Wall, Manasquan, Neptune, Spring Lake, and surrounding towns regardless of the reason.
Our direct and understanding approach ensures that the financial and legal rights of our clients are met.
To schedule a confidential case assessment with our firm today regarding your divorce, call (732) 812-3102 today for a free and confidential consultation.