You decide that you want to get divorced, and you tell your spouse about your plans. They tell you that you’re not going to be able to retire if you do it. Maybe they use this as a bargaining chip, trying to get you to call off the divorce. They know that you were planning to retire by using their pension plan, and so they say that they’re going to keep the entire plan if you divorce them before they retire.
But is this true? It likely is not. That’s just one reason why you need to know about all the legal options at your disposal.
Using a Qualified Domestic Relations Order
The truth is that you can often use a Qualified Domestic Relations Order (QDRO) to split up a pension plan or retirement fund. It can be used in advance to divide the plan at the time of divorce, even if your spouse hasn’t retired yet. When they do retire in the future, they still have to follow the instructions from that plan and pay you a percentage.
This doesn’t necessarily mean that you will get half of the pension plan or anything of this nature. For instance, maybe you were only married for half of the time that your spouse worked for the company in question. You may be given half of the pension that was earned during that time, although that would just be 25% of the total.
However, either way, it’s clear that this would mean your ex was not allowed to keep 100% of that marital asset. Understanding how divorce will affect your retirement is crucial which is why you may want help to learn more about adjusting your estate plan to fit your new situation.