If you are about to begin the divorce process in Tennessee, do not forget to consider the value of your pension when doing your planning. Your spouse might want to claim a part of your pension, so you need to be familiar with the way pensions might be divided and how you can plan to protect your retirement plan.
Dividing the pension
Any part of the pension earned after marriage is usually considered marital property unless you include the pension in your prenup as a separate asset. As an equitable distribution state, Tennessee law establishes that marital assets are divided fairly, which does not always translate to 50-50. If you and your spouse choose to opt into a community property agreement, which Tennessee and a handful of other states allow you to do, then the marital assets will be divided 50-50. Division of pensions, however, is a nuanced process, as the total value of the pension must be calculated, as well as the value of it that can be considered marital property and finally, the percentage of the pension that your spouse will be entitled to. To claim this percentage, your spouse must file for a qualified domestic relations order, or QDRO, during the divorce process.
Points to consider regarding the division of your pension
As you plan for and begin the division of property negotiations during divorce, you need to remember you have options to help you protect your interests. These options include:
- Offering other property, such as real estate, in exchange for your pension
- Choosing to keep pensions of both parties as separate assets if they are of similar value
- Dividing the pension equitably and updating plans for retirement to recuperate from the loss
Retirement accounts are an often-overlooked asset during divorce. However, pensions and other retirement accounts are a central part of your financial stability as you grow older, so be sure to protect them.