Divorce is often marked by emotional turbulence and complex financial considerations. One of the major concerns that arise during this process is what happens to retirement savings or pensions.
If you are going through a divorce, it is crucial to understand how pensions are handled. Our team of family lawyers in Vaughan is here to guide you through this intricate process.
Understanding Pensions during Divorce Proceedings
The division of pensions becomes a pivotal point of contention between spouses, adding another layer of complexity to an already challenging situation.
Will My Pension Be Split during the Divorce Process?
Pensions amassed during a marriage are generally deemed marital property subject to division. That means that the value of pensions earned by either spouse during a marriage could be subject to distribution, ensuring a fair and equitable sharing of resources.
Valuing and Dividing Pensions
Valuing pensions can be complicated. This is because they are not always straightforward assets like bank accounts. Pension valuation usually involves assessing its present value based on factors such as the duration of the marriage, the type of pension and the pension plan’s rules.
There are a few methods for dividing pensions during divorce:
- Pension Division Order: This allows the pension plan administrator to split the pension benefits between you and your spouse. This division can happen without the pension being cashed out.
- Lump Sum: If you and your spouse agree, the pension can be divided as a lump sum payment. That means one spouse would receive an amount equivalent to their share of the pension’s value.
- Offsetting: Instead of dividing the pension directly, other assets, like the marital home or investments, can be offset against the pension value. This way, one spouse may keep the pension while the other gets a larger share of other assets.
Are There Alternatives to Pension Splitting?
Yes, there are alternatives.
As mentioned above, a couple can decide to exchange an asset of comparable value, like the portion of the pensioned spouse’s ownership in the marital residence.
Another option is to purchase life insurance valued at the same amount as the pension benefits, with the former spouse designated as the policy beneficiary. The spouse would relinquish their claim to the pension’s survivor benefit as part of the arrangement.
Pensions and Common Law Partnerships
Unlike spouses going through a divorce, common law partners don’t automatically get an equalization payment if their relationship ends. Thus, they might not receive a share of their former partner’s pension, no matter how long or important their relationship was.
Pensions can be confusing during a divorce. That’s why it’s essential to get legal advice and assistance. If you’re located in the Vaughan area and require legal assistance, our team of knowledgeable divorce lawyers can guide you through the intricate elements of the divorce process.
Are You Looking for a Divorce Lawyer in Vaughan?
The intricacies of divorce don’t have to overwhelm you. Our team of divorce lawyers in Vaughan offers the legal guidance you need to sort through the process successfully. Whether you seek assistance with separation, divorce or pension matters, we’re here for you.
GDH Family Law will assist you in navigating the process of divorce, pension valuation and equalization. With our advice, support and guidance, we’ll help you achieve a settlement that suits your needs now and in the future.