You’ve dedicated your career to your profession, and your pension reflects your employer’s appreciation for your hard work and commitment. But while a pension can make up a significant part of your retirement plan, it can be jeopardized when you find yourself embroiled in divorce. Here, your spouse may try to gain access to your pension, which is a very real possibility given our state’s equitable distribution statute. Yet, splitting your pension with your spouse isn’t automatic. In fact, there may be ways for you to effectively shield your retirement assets from your spouse so that you have the resources you need and deserve as you move into the later stages of your life.
But how do you do that? There are several strategies available to you. Let’s look at some of them so that you can make a more fully informed decision that’s right for you.
Tips for protecting your pension during divorce
You have to be prepared with a strong game plan when you enter the property division process. When it comes to shielding your pension, you might want to consider doing the following in your marriage dissolution:
- Bargain with other assets: Ultimately, your spouse may go after your pension because they want financial stability once your divorce is finalized. But there may be other ways to give them what they want without splitting your pension. For example, you may be able to use equity built up in the family home as a negotiating piece, giving that to your spouse in exchange for keeping all of your pension benefits. You can also identify assets that have sentimental value that you can use as leverage during settlement negotiations.
- Consider a buyout: Another option is to simply buyout your spouse from their portion of the pension. This will likely include payment of a lump sum, which may be difficult to let go of, but that sum can end up being much less than the price of half of your pension.
- Transfer other retirement assets: If your spouse is adamant that they want more retirement-based assets, then you might want to see if you can utilize other retirement assets to your benefit. By using a Qualified Domestic Relations Order, you can transfer assets like portions of your 401(k) without facing tax penalties. If you’re of working age, these retirement assets may be easier to replenish over time, which will feel like a much smaller hit than losing part of your pension.
There may be other ways to protect your pension in divorce. Your first step is to identify what it is that your spouse really wants. Then, you can think creatively about how to provide them with a resolution that satisfies their needs while blocking off access to your pension. This isn’t always an easy task to achieve, but you can better position yourself for success by thoroughly analyzing the facts of your case and developing a strong legal strategy given the circumstances at hand.
Develop a divorce strategy that protects your long-term interests
Your financial well-being is on the line when you go through divorce. If you put together a haphazard negotiation strategy, then you could be taken advantage of during negotiations or lose out at trial. Either way, you could inadvertently put yourself at a financial disadvantage if you’re inadequately prepared going into your marriage dissolution. That’s why now is the time to get to work building your legal strategy. By doing so, you can rest assured that you’ve done everything possible to protect your long-term interests.