What Happens to My Michigan Pension if We Get Divorced?

 Posted on April 14, 2022 in Divorce

Married government employees in Michigan who are nearing or have reached retirement age often face a difficult question when confronting the prospect of divorce: What happens to pension benefits in a divorce? Pensions are earned after long years of difficult work and beneficiaries may understandably be reluctant to see their retirement divided as part of a divorce. 

However, pension funds that are earned over the course of a marriage are considered marital property and must be divided in a divorce. If you are considering divorce and want to know what Michigan divorce laws mean for your retirement funds, consider getting help from a skilled Michigan divorce attorney. 

Is My Entire Pension Marital Property?

If you started working at your job before you got married, any portion of your pension that you earned before getting married is not considered marital property. From the date of your marriage onward, however, all retirement funds are community property. Determining exactly how much of a pension is marital property can be tricky; you will likely need help from an attorney or accountant to determine what your pension balance was when you got married so you can estimate exactly how much of the pension is marital property. 

How Much of My Pension Will My Spouse Get? 

The most common method of valuing and dividing pensions is called the “coverture fraction,” which essentially divides the value of the pension by the number of years spouses were married and then divides that value in half and gives it to the non-beneficiary spouse. For example, if you have been married for 20 years and you worked for 30 years, two-thirds of your pension is marital property. Assuming your pension benefit is $3,000 a month, $2,000 of this would be marital property; half of that, or $1,000, would belong to your spouse.  

However, this is not the only division method available. Whichever method is used, it is important to note that courts do not always follow a strict formula when dividing pensions and other marital property because courts want to ensure that the division of marital property is fair. Your spouse’s work history and financial resources and priorities can leave open the option for many different marital property division possibilities. The best arrangements are usually met when spouses work together, using mediation if necessary, and come to a property agreement themselves rather than relying on a court to decide for them. 

Schedule a Free Consultation with an Oakland County Divorce Lawyer

At Elkouri Heath, PLC, our experienced Oakland County divorce attorneys know that dividing your assets during divorce can have a significant impact on your long-term financial planning. If you are getting divorced and are worried about how your retirement funds could be affected, call us to schedule a free consultation at 248-344-9700. We can help you review your options and build a strong case so that you get the fair share of the marital property to which you are entitled. 

Source: 

http://www.legislature.mi.gov/(S(ueftppodecgoquziwtr3no05))/mileg.aspx?page=getObject&objectName=mcl-Act-259-of-1909