The Effect Of Illinois’ Equitable Distribution Divorce Process On Pensions

 Posted on October 24, 2014 in Divorce

Illinois relies on a principle of equitable distribution in dividing marital assets and debts upon divorce. In addition to savings, real property, personal property, business interests, and investments, the division process also reaches pension benefits. The distribution of pension benefits can sometimes be a source of confusion, especially when some benefits were accrued prior to marriage, or will continue to accrue after divorce. In understanding and anticipating the impact of divorce on pension benefits, the skill and knowledge of an Illinois family law attorney is an invaluable resource.

Pension Benefits Accrued During Marriage Are Subject To Equitable Distribution In Illinois

The general rule is that a non-employee ex-spouse only has a right to pension benefits that accrued during the marriage. With regard to the division of this segment of pension benefits, there are two primary methods. In some instances, the court will divide pension rights between ex-spouses. This is accomplished via a Qualified Domestic Relations Order (QDRO). This type of order compels the pension plan administrator to assign a court-determined amount of the employee spouse’s pension to the non-employee spouse upon finalization of divorce. In other instances, rather than issue a QDRO, the court will allow the employee spouse to keep 100 percent of the pension benefits, but award an offsetting amount of other assets to the non-employee spouse.

401K Benefits Accrued During Marriage Are Subject To Equitable Distribution In Illinois

In an equitable distribution state like Illinois, 401K benefits fall within the scope of property to be divided. For divorcing spouses, it is critical to understand that “equitable” does not necessarily translate to “equal.” Rather, an equitable distribution is intended to be a fair one. The process of determining a fair distribution is the responsibility of the judge presiding over the divorce. During the process, the judge must consider an array of factors, including the nature and extent of contributions made by each spouse to the marriage. Income, homemaking, child-rearing, business interests, investments, and pension benefits are all considered contributions. Many of these factors implicate the duration of the marriage, which is itself a factor to be weighed by the judge in the equitable distribution process.

What To If You Are Concerned About The Impact Of The Divorce Process On Your Pension Benefits

Often, divorcing spouses are able to reach an agreement regarding the division of pension benefits, whether in the form of 401K benefits or otherwise. Here, a one-time lump-sum payout is one settlement option. When an agreement cannot be reached, it will be up to a judge to determine an equitable distribution. In the absence of an agreement, it is essential that you receive skilled representation by an experienced St. Charles family law attorney. Such an attorney will strongly advocate for your rights while navigating Illinois’ equitable distribution system and fully emphasizing your every contribution to the marriage.

Disclaimer: Goostree Law Group uses an outside QDRO consultant to assist in the preparation of QDRO documents.

Sources:

http://www.dol.gov/ebsa/faqs/faq_qdro.html