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How are pension assets split after divorce?

The financial matters in a divorce can pose challenges to any couple. The financial conflicts often multiply when the couple is in the middle of a high-asset divorce. One such asset in a divorce that may cause conflict is a spouse's pension benefits that were earned during the marriage. The pension is also considered a marital asset and is also a property that is subject to equitable distribution.

The retirement benefit may be distributed equitably between a participant and an ex-spouse until both spouses are satisfied. This asset division is done according to a formula that was set up during a New York case called Majauskas v. Majauskas. According to this Majauskas formula, an ex-spouse would get 50 percent of the share of the retirement benefits that were earned during the marriage.

The formula is 50 percent multiplied by the amount accrued during the time in which the couple was married divided by the total amount credited at the time of retirement. In order to avoid a dispute, a couple also has other equitable distribution choices. The flat dollar amount is one such choice. According to this, the ex-spouse will get a flat dollar amount, even if the participant's salary increases substantially before the retirement period. That will impact the ex-spouse's share of what is known as Cost of Living Adjustment, or COLA.

Participants, including a high-profile couple, may wish to debate the factors in the Majauskas equation. However, there is also another method for asset division -- the couple can calculate a hypothetical benefit that uses the participant's salary and the amount accrued on a specific date. The date that is generally used in this case is the date on which the divorce process was started. In this case, any salary that the spouse earns when filing the divorce petition will not be taken into account for equitable distribution.

Source: OSC.State.NY.us, "Divorce and Your Benefits," accessed on July 15, 2015

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