If you are going through or considering divorce in Maryland and are worried about protecting your pension, you are not alone. Many do not realize how complicated dividing pensions and other retirement benefits can be. Getting sound advice from a Maryland family law attorney who has experience with pensions during a divorce can help protect your funds.
This article discusses how courts divide pensions during a divorce, why it matters, and what you can do to help protect what you have worked hard to earn. It also shares common mistakes to avoid and offers simple tips to help you stay one step ahead.
The Importance of Understanding How Divorce Affects Your Pension
When divorce negotiations begin, most couples concentrate on the most obvious assets, such as their house and banking accounts. Pensions are easy to overlook because they feel more like a promise for the future than cash in hand.
However, pension and retirement plans are often among a person’s most significant financial assets. Because of this, understanding how Maryland family courts treat these assets during divorce is the first step toward making smart choices about your future.
Does a Pension Count as Marital Property in Maryland?
Maryland family courts follow the concept of equitable distribution when dividing assets during a divorce. This means dividing marital assets fairly, but not necessarily equally.
If you earned any part of your pension while you were married, that portion is usually considered marital property. This means that even though the pension is in your name, and your spouse did not contribute to it financially, they may have a claim to it.
That does not mean your spouse is automatically entitled to half of your pension. However, a court will look hard at what you earned during the marriage and decide what is fair based on what it considers to be fair and equitable based on certain factors.
Factors Maryland Courts Look At When Dividing Pensions
There is no single formula Maryland courts use to divide pensions. Instead, they look at the whole picture, including:
- The length of the marriage
- Other marital assets
- The ages of the parties
- Each party’s income and earning power
Sometimes, instead of dividing the pension itself, the court will give your spouse something else of equal value, such as more equity in the marital home. This is called an “offset” and can work well if you are close to retirement and want to keep your pension intact.
In other cases, the court may order a direct split of the pension benefits.Either way, it pays to be prepared. A family law attorney with experience handling the division of pension benefits can help prepare the proper documents and avoid costly surprises later on.
How to Hold On to More of Your Pension in a Divorce
While every case is different, certain steps can be taken to protect your hard-earned pension during a divorce. These tips will help you build a stronger case and achieve the best outcome:
1. Understand Your Pension
Start by gathering documentation related to your pension. This includes benefit statements, plan summaries, payout estimates, and anything explaining your retirement benefits.
You do not need to know every detail, but you must understand what you have and how it works. If the paperwork is confusing, an experienced Maryland family law attorney can help explain the legal and financial jargon.
2. Consider When You Got Married
Remember, only the part of your pension earned during the marriage is typically considered marital property. For instance, if you were already on the job for five years before getting married, that earlier part of your pension may be considered non-marital property.
However, the court will require details and documentation that match the timeline. This includes verification of your employment history, service dates, and marriage timelines. Experienced Maryland family law attorneys help clients gather the proper documents and build a solid case.
3. Hire a Knowledgeable Maryland Family Law Attorney
Handling the division of a pension on your own is like trying to read a road map without any street names. The process will contain unfamiliar rules, unexpected requirements, and long-term consequences.
Your attorney will review your entire financial picture, not just your pension, and suggest creative ways to find balance. Perhaps that means negotiating for more of the pension in exchange for other assets or setting up payments that do not jeopardize your future income.
Have an attorney who knows Maryland’s laws, understands the local courts, and is not afraid to speak up for you.
Common Mistakes to Avoid When Dividing Pensions
A few simple mistakes can lead to considerable financial losses during a divorce. Here are two of the most common mistakes to avoid with pensions:
Make No Assumptions About Your Pension
Just because it is in your name does not mean it is protected. If you earned the pension during your marriage, a court may consider it a shared asset, even if your spouse never contributed to it.
Trying to hide a pension or “forgetting” to mention it during negotiations could make things worse. Courts do not look kindly on people who are deceitful during divorce negotiations, often meeting with negative consequences.
Failing to Plan for the Long Term
A short-term mindset can lead to long-term regrets, especially regarding retirement. Sometimes, people give up a portion of their pension benefits to keep another asset, like the family home. That might seem fair at the moment, but what about 15 years from now?
Others forget to factor in taxes. Unless you properly structure distributions from a pension plan, you could be stuck with a huge tax bill. An experienced Maryland family law attorney will help you look beyond the short term to consider what will be best for you five, ten, or twenty years later.
Contact Milstein Siegel for a Skilled Maryland Family Law Attorney
Milstein Siegel works with clients across Maryland to protect their pensions, avoid common mistakes, and emerge from divorce with a stronger future. If you have questions, we are here to listen and help you make smart decisions. Contact us today to request an initial consultation.