Divorce and retirement accounts

Navigating the Complexities of Divorce and Pensions

The division of assets can be a challenging part of your West Virginia divorce, particularly if you and your spouse have pensions or retirement accounts. These are often among the most valuable assets a couple has to divide, so they can be the subject of bitter disputes. If you or your spouse have a pension to split, learn what to expect and what your options are.

Having the right legal counsel during your divorce can make a significant difference in the outcome. Call Pence Law Firm at 304-407-7852 to set up a consultation with our team right away.

The Division of Marital Assets in West Virginia

As is the case with most states, West Virginia is an equitable distribution state. Rather than assuming that all property acquired during a marriage will be split down the middle during a divorce, the principle of equitable distribution aims to split up property in a way that is fair to both parties. A number of factors are considered in these decisions, such as both parties’ earning ability, separate assets they may own, and their contributions to the marriage. Since West Virginia is an equitable distribution state, your pension could be split up in any number of ways, depending on what you agree upon.

Issues to Consider with Pensions

Compared to other types of assets, pensions can be fairly complicated. It’s not as easy as splitting it down the middle and giving part to each spouse. The value of a pension may fluctuate, and pensions also have different structures. For example, a defined benefit plan gives the recipient a set monthly amount after their retirement. However, defined contribution plans may fluctuate in value, depending on the investments chosen. These can be much harder to divide. Finally, you have to consider government pensions, which are generally bound by strict laws and regulations that further complicate this process.

There are several ways you may choose to divide a pension during a divorce—we’ll explore some of those options in greater detail.

Splitting Up the Pension

Pension sharing is a popular option for those who want a clean break after a divorce. With a QDRO—or qualified domestic relations order—the person receiving part of the pension must then transfer their share into their own retirement account. If they do not roll the funds into another retirement account, they may be hit with a heavy financial penalty. 

The amount that is up for division depends on how long the pension has been accumulating and the length of the marriage. If the partner who earned the pension started there before getting married, at least part of the pension will not be subject to division. If they were married for the entirety of their career, the entire pension may be subject to division.

Offsetting Pension Shares

It’s common for the person who earned the pension to want to keep it in its entirety. Pensions can be incredibly valuable, as they often grow in value the longer you remain with a workplace. If the person who owns the pension does not want to split it, they may choose to compensate the other party by offsetting their share of the pension. For example, if they agree on the other party receiving $100,000 of the pension, the person who owned the pension may instead give up $100,000 of their share of the marital home to account for that loss. This way, they do not actually have to break up the pension and diminish its value.

Regardless of how you decide to split up a pension, securing a fair valuation is crucial. While some types of pensions are easy to value, others change with time and with changes in the stock market. Both parties benefit from a fair valuation from a qualified professional.

Get the Legal Support You Deserve with Pence Law Firm

Divorce is never easy, but the right legal team can streamline the process and help you move forward. At Pence Law Firm, we help divorcing individuals all over the Charleston area prepare for their next steps in life. To find out how we can help you, call us at 304-407-7852 or send us a message online.