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How to divide a pension in a divorce?

September 8, 2010 //  by James//  Leave a Comment

I got a great question today in my Ask a Lawyer Section.  The question was this – “In North Carolina is a spouse entitled to half her husband’s pension? If so, when does she get it and is it considered income when considering Alimony and Child Support?”

Here is a quick synopsis of this difficult and complex area of family law – one that even a lot of lawyers have a hard time understanding because of all the variables at play…

Both spouses are entitled to 1/2 of any assets that were acquired during the course of the marriage, including pensions.  These are called marital assets.  Assuming that the entire pension was earned while the spouses were married, then the payments would be divided equally.  However, the payments will not necessarily begin until the spouse that earned the pension would be entitled to receive a payout.

For this reason, we often see one spouse “buy out” the other.  To do this, we will use a present value calculation of what the spouse’s half of the future payments would be worth as a lump sum today.  Because of the inherent differences in opinion of what this lump sum payment might be, there is a lot of room for negotiation here.  The buy-out could come in the form of a one time payment, or as a credit against other assets.

The amount received from the pension could be considered as a factor when the court is determining the amount of alimony – because it would affect both spouse’s financial need and ability to pay.  In addition, the amount of the pension could also be counted as gross income and affect any child support payments.

In short, there are a lot of variables at play here. Not to mention the tax consequences of this whole process.

Category: Divorce - General, Equitable Distribution, TaxesTag: Asset Division, divorce, Equitable Distribution, Half of Pension, Marital Property, Pension

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The Hart Law Firm, P.A. was originally founded in 2005 as a divorce and family law firm in Orlando, Florida. We moved to North Carolina in 2010, and now work with families to help them navigate the process of separation and divorce.

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