Protecting Pensions & 457's

Pension in Divorce Settlement

Pension in Divorce Settlement

When it comes to a pension in divorce settlement, there are unique issues that can arise.

The controlling authority in New York on a spouse’s entitlement to pension plans in a divorce is the case of Majauskas v. Majauskas, 61 NY 2d 481 – NY: Court of Appeals 1984. In Majauskas, the Court held that “[v]ested rights in a noncontributory pension plan are marital property to the extent that they were acquired between the date of the marriage and the commencement of a matrimonial action, even though the rights are unmatured at the time the action is begun.” The matrimonial court in the exercise of the discretion vested in it by part B of section 236 of the Domestic Relations Law may order distribution to one spouse of an equitable portion of that part of the present value of the other spouse’s pension rights earned during marriage, or may provide that upon maturity of the pension rights the recipient pay a portion of each payment received to his or her former spouse or may, if it determines that valuation or other problems make equitable distribution impractical or burdensome, order a distributive award in lieu of equitable distribution.

The rule ordered by Majauskas is widely followed by New York courts and usually applied in New York divorce cases. This means that your soon-to-be ex-spouse will most likely be entitled to your pension benefit. Depending on the length of the marriage, this could be a significant amount of the pension you have accrued.

One way to avoid the difficulty of parting with your pension in divorce settlement is to come to a unique agreement on your own. Divorce Mediation is a very powerful tool that many couples use to come to solutions that work for them and the particular assets and liabilities they have.

For instance, if your spouse is a school teacher and has a pension or other retirement benefits of his or her own, then the easiest way to resolve this issue might be to take both off of the table. Even if your spouse does not have similar retirement benefits, there may be certain assets he or she feels particularly strongly about, and you can trade off these other assets to keep your whole pension in divorce settlement.

Dividing a pension in divorce settlement can be a very tricky process. For information on how you can reach an agreement to take this asset off the table, call us at 1-855-Law-FFNY for a free consultation.

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