When a divorce occurs, both parties must commit to an extended period of asset reallocation as the pair separates. Even in amicable circumstances, taking the time to divide property and finances can still be complex—and in more difficult situations, this is even more true.
Federal employees may find that divorce is harder still, because they carry unique benefits that most other individuals do not need to consider during the process of separation. Regardless of the context in which a federal employee is pursuing (or being notified of) divorce, the best first step is to seek legal assistance.
Milstein Siegel has extensive experience in navigating federal assets and employment advantages. These can operate differently from the more common marital divisions of elements such as 401(k) retirement funds.
Here is an overview of what federal employees can expect to highlight during their divorce proceedings and why a divorce attorney is a wise choice throughout the process.
The Challenges of Divorce for Federal Employees
Many people seek employment with the federal government because it is notorious for providing comprehensive, competitive, and compelling benefits. However, when a divorce occurs, these benefits—like many others—can potentially be divided in order to fairly compensate the other party. Some of the federal benefits that make this situation unique include:
- Federal pension – Many, if not most, federal jobs provide a pension, or a benefit plan that ensures the beneficiary receives income for the rest of their lives once they retire. For federal employees, these are typically called FERS (Federal Employment Retirement System) annuities. Although annuities often enforce strict fees to access the funds outside of the intended scope of the product, a FERS annuity can nonetheless be considered among potential assets for division in a divorce.
- Survivor benefits – Another advantage of the FERS benefits for federal employees is its robust survivor program. Typically, a spouse will receive 50% of the FERS pension’s value when its original owner passes away. However, in the case of divorce, the former spouse may be entitled to claim their survivor benefits while the primary beneficiary is still alive. Because survivor benefits are calculated from the value of the pension, this can significantly reduce the amount left in the pension plan for the beneficiary when they retire.
- TSP – The Thrift Savings Plan, is a tax-deferred method of saving for retirement that functions as the federal equivalent of a product such as a 401(k). Because of the low expense ratio, many federal employees regularly contribute to their TSPs, which means the balance could be substantial by the time two partners divorce. A TSP is eligible for division during a divorce.
- Insurance – Once the two parties are divorced, the ex-spouse can no longer benefit from health insurance provided by the federal employee. However, in certain situations, they may still be able to claw back the life insurance policy. This is a gray area and requires the attention of an experienced attorney.
How Milstein Siegel Can Help
Federal employees carry numerous government-specific advantages from their jobs that navigating a divorce becomes all the more difficult. Many types of asset division do not favor the owner of the asset. Milstein Siegel can help you protect your assets.
When a FERS annuity is divided during divorce, it can be distributed to the other spouse in a lump sum or as a percentage of future payments. This distribution should not exceed what the federal employee themselves will receive.
Survivor benefits can become a complex issue, especially when one or both partners remarry after divorce. If the federal employee chooses to remarry, an attorney can assist with adding their new spouse to their benefits without further reducing the future payout from their pension.
Federal employees often plan their saving and spending habits based upon their anticipated future pension and yearly expected income. Divorcing can significantly alter this number, which is why it is critical to work with a divorce lawyer who can represent you and ensure that your quality of life remains the way it was intended.
Get Legal Representation During Divorce
Divorce is rarely simple, but the division of federal assets can make this process even more complicated for government employees. The attorneys at Milstein Siegel take the time to learn the intricate details of each client’s personal story so that they can offer individualized guidance and representation.
Contact Milstein Siegel to schedule a consultation if you are a federal employee or the spouse of such an employee and need assistance with dividing benefits during divorce.
