Divorcing in Maryland often brings unexpected challenges, especially when it comes to dividing pensions. Many individuals are surprised to learn that their spouse may be entitled to a portion of their hard-earned retirement savings.
Pensions frequently represent a significant part of a couple’s marital assets, yet there’s considerable confusion about how Maryland courts handle pension division during divorce proceedings. While the answer isn’t always straightforward, you need to understand that if you accrued any part of your pension during your marriage, Maryland courts may classify it as marital property, potentially giving your spouse a claim to a share of it.
Whether you’re at the beginning of the divorce process or already negotiating terms, understanding these aspects of Maryland divorce law can significantly impact your financial future.
Understanding Marital Property in Maryland
One of the most important steps during a divorce is determining what qualifies as “marital property.” Under Maryland family law, marital property includes most assets acquired by either spouse during the marriage, regardless of whose name is on the account or title. This includes homes, vehicles, bank accounts, and pensions.
Conversely, non-marital property includes:
- Assets acquired before the marriage
- Inheritances or gifts made specifically to one spouse
- Items excluded by a valid agreement (like a prenuptial agreement)
Contributions to your pension before getting married are non-marital; only the portion you accumulated after the wedding is typically considered marital. Any post-separation contributions may not be divisible.
What Makes Pensions Complicated
Unlike a checking account, pensions do not have a balance that can be easily divided. Some grow over time in accordance with formulas tied to years of service and salary, making them harder to value at a specific point.
An experienced Maryland family law attorney will calculate and advocate for a fair division of your assets, especially when pension and retirement accounts are involved.
Factors Courts Evaluate to Divide Pensions and Retirement Accounts
Maryland courts follow the rule of equitable distribution when dividing a couple’s assets, including pensions and retirement accounts. This means they attempt to do what is fair, not necessarily equal.
Some of the factors that Maryland law requires courts to weigh include:
- The duration of the marriage
- The financial needs and circumstances of each party
- Each spouse’s monetary and non-monetary contributions to the marriage
- The age and health of both parties
- Any agreements made before or during the marriage
Judges consider the combination of all these factors to determine a fair distribution of assets. However, no exact formula is used, so predicting the outcome without the proper legal guidance is highly challenging.
Common Misconceptions About Pensions in Divorce
With regard to dividing retirement benefits, especially pensions, people often have some strong assumptions, most of which are wrong. Here are a few of the most common misconceptions and what Maryland law actually says.
“It’s in my name, so it’s mine.”
Just because a pension is under your name does not mean your spouse has no claim to it. If you earned any part of that pension while you were married, it is likely marital property, which means it is divisible.
It does not matter who contributed the money or whose name is on the account. What matters is when the asset grew and whether it falls inside the marriage window.
“We weren’t married that long, so it shouldn’t matter.”
Even a relatively short marriage can entitle a spouse to a share of a pension. For example, if you were married for six years during a 25-year pension, the court will divide what was gained during the marriage, regardless of how long it lasted. Your spouse may be entitled to a percentage of that six-year portion.
“I’m not even retired yet, so there’s nothing to divide.”
The value of a pension is not only what it is worth right now but also its future value. You do not need to be retired or nearing retirement for Maryland courts to include a pension in your divorce settlement. Courts frequently divide future pension benefits in the present, even if the payout is years later.
What You Can Do to Protect Your Pension
When preparing for divorce, being proactive is wise. Although you may not be able to keep everything, clear steps can be taken to protect your interests for the best possible outcome.
1. Keep Detailed Records
Start with the paperwork. You will need to demonstrate:
- When you started your job
- How much you have contributed over time
- The current value of your pension, if known
- Any statements that mark pre-marriage or post-separation contributions
The more information you have, the easier for your attorney to distinguish between marital and non-marital portions.
2. Consider Offsetting with Other Assets
In some cases, trading your share of the pension for something else may make sense. If you want to keep your full pension intact, you could offer your spouse a larger piece of another asset, like the home’s equity or a joint savings account.
This kind of negotiation has to be balanced and well-documented, but is not always the right option. However, it is worth exploring with the help of a legal professional who understands the long-term trade-offs such as tax implications.
3. Do Not Go It Alone
Valuing a pension is complex, and understanding how Maryland courts interpret “fairness” takes experience. Enlist the services of an attorney early in the process.
Engaging an experienced Maryland family law attorney can better help protect what you have earned. Whether working with actuaries to value your pension or negotiating a settlement that makes sense long-term, a skilled attorney knows how to guide you through the process to the best outcome.
Contact Milstein Siegel for Help Protecting What You’ve Earned
Dividing a pension in divorce is not always simple, but can be skillfully done with experienced legal counsel. Whether your pension gets divided (and how) comes down to facts, timing, and smart strategy.
Not sure how your pension fits into the divorce? Connect with a trusted Maryland family law attorney at Milstein Siegel and get the guidance you need.