Can I Avoid Having My Pension Divided in My Divorce?
By: Gordon & Perlut, LLC
If you are approaching the age of retirement and are planning to get divorced in the Chicago area, it can be very stressful to learn your pension is likely subject to distribution under Illinois law. The Illinois Marriage and Dissolution of Marriage Act (IMDMA) outlines factors for the court to use when dividing marital property, which can include pensions.
Under Illinois law, marital property is divided according to the theory of equitable distribution — assets and debts of the marriage are divided in a way the court determines to be fair to both parties. You may be thinking: I earned this pension by working for decades at my job — is it fair to divide it between my spouse and me? When courts consider what type of property division is “equitable,” the court is not necessarily thinking about which spouse earned a particular asset. To be sure, courts do consider who may have earned the asset, but they are thinking about contributions to the marriage made by the other spouse and other aspects of the parties’ lives and marriage. Therefore, in many divorce cases, a pension is subject to division.
However, you may be able to avoid having your pension divided in your divorce if you enter into a Marital Settlement Agreement with your spouse where that spouse waives his or her interest, or if your pension is excluded in a premarital or postnuptial agreement, or if your pension is largely classified as separate property. Let us say more about how these scenarios might work.
Entering Into a Marital Settlement Agreement to Keep Your Pension
Many people who are getting divorced in the Chicago area want to have control over the way in which their property gets divided. With a Marital Settlement Agreement, you will still need to consider the value of your pension, and you will likely need to give up rights to other assets to prevent the pension from being divided. However, if you are willing to negotiate and to give up something else to keep your pension intact, it is possible to avoid having your pension divided during your divorce.
Premarital or Postnuptial Agreement Excludes Your Pension
If a premarital agreement or a postnuptial agreement expressly excludes your pension from distribution in the event of a divorce, you will be able to avoid having it divided in the divorce. However, it is important to work with an attorney to ensure the terms of the agreement are enforceable.
Your Pension is Classified as Separate Property
Under Illinois law, only “marital property” is divided in a divorce. When a divorce proceeding begins, a court will classify all property owned by either spouse as either marital or separate property. Typically, separate property includes everything acquired by a spouse prior to the date of the marriage and held separately, or property acquired by only one of the spouses during the marriage through a gift or an inheritance.
For most people, a pension will be classified almost entirely as marital property, assuming they were married during the length of their job in which they built the pension. However, some second or later-life marriages may have resulted in relatively limited contributions to a pension during the time of the marriage. If this is the case, most of the pension could be classified as separate property and not subject to distribution.
Contact a Chicago area Pension Division Lawyer