The division of a pension in a divorce is typically subject to the divorce laws within a particular jurisdiction. In some cases, a spouse may be required to share her pension with her former spouse as a condition of the divorce. A court may order a division of a pension because the law requires it or because one spouse has demonstrated to the court that he is entitled to financial support or that the pension can legitimately be considered marital property.
As every divorce case and set of divorce laws is different, what happens to a pension in a divorce depends on a number of factors, including the ability of the divorcing couple to come to an amicable settlement of their financial affairs. In many divorce courts, couples are urged to work out a divorce settlement in consultation with their attorneys and financial advisors. In many cases, the status of the pension in a divorce will be determined as a result of this settlement process. If a couple is unable to work out their splitting of assets, they may have to go to trial. In such cases, a judge will make a decision regarding how the couple divides their assets and debts, including any pensions.
One significant difficulty in dividing a pension in a divorce is that a worker may have contributed to the pension prior to the marriage. In many jurisdictions, including the United States, assets acquired before a marriage are not subject to division in a divorce. It would then be necessary to determine which percentage of the pension fund can properly be considered a marital asset. In addition, proceeds from a pension may, in some instances, be considered income that could affect the amount of alimony or child support that a spouse may be able to collect.
In the United States, marital estates are typically divided according to two separate legal theories. In those states with community property laws, all assets and debts acquired after a marriage may be divided equally between the two partners. In other states, the rule is equitable distribution of marital assets and debts. This means that any assets acquired during the marriage will be divided according to the needs of each party rather than simply divided in half. In such cases, a judge will likely look at the circumstances of each partner and award a share of assets, including a pension, to each partner in accordance with what is presumed to be his or her future financial needs.