Can My Pension Be Impacted By a California Divorce?

Posted in uncategorized on June 7, 2021

One of the many things that may concern you during your divorce case is the fate of your retirement savings or pension plan. You’ve worked hard to earn the money you will receive when you retire. If you get divorced in the State of California, however, your pension plan will be subject to division, as retirement benefits are considered community property.

How Much of My Pension Can My Ex Be Entitled to in California?

Unlike most states, California abides by a community property law rather than an equitable division law. In a community property state, the court sees a couple as a community. In a divorce case, all community property will be divided in half, with 50 percent going to one spouse and 50 percent going to the other.

Community property describes all assets and income earned throughout the course of a marriage, including:

  • Real estate
  • Business assets
  • Vehicles
  • Furniture and appliances
  • Electronics
  • Jewelry and collectibles
  • Family heirlooms
  • Bank accounts and savings accounts
  • Retirement savings
  • Investments

Under California’s community property law, your ex-spouse could be entitled to 50 percent of your pension in a divorce case. It will not matter that you were the one who worked or made greater contributions to the community property than your spouse. California law divides all community property in half upon dissolution of marriage or legal separation.

Can a Prenuptial Agreement Protect Retirement Benefits in California?

If you have not yet gotten married, you can protect your retirement benefits using a prenuptial agreement. A prenuptial agreement is a legally binding contract that outlines how property division and other matters will be decided should the couple ever get divorced. You can include your pension plan and retirement benefits in your prenup, if desired, to protect them from being divided with your spouse in the event of a divorce. If you are already married, you may still be able to protect your pension plan with a postnuptial agreement.

Pension Plans and Ex-Spouses as Beneficiaries

One issue many divorcees encounter is the inability to remove their ex-spouses from their pension plans, where they are listed as beneficiaries. Even if a divorce settlement or court order entitles your ex to only a small percentage of your pension plan, you may not be able to change your beneficiary option if you have a public pension. The California Public Employees’ Retirement Law prevents you from doing so.

If you were to pass away before your ex when he or she is named as a beneficiary, your ex would receive a much larger share of your pension despite the terms of your divorce settlement. Changing your beneficiary on a public pension plan in California requires a court order. You are more likely to receive a court order if you request the change early on, before initiating your divorce proceeding.

How Else Can You Protect Your Pension?

You may also be able to protect your pension during a California divorce case by reaching a settlement with your ex-spouse and avoiding a trial. All couples in California have the chance to work out a settlement agreement between themselves before the case goes to court. In a settlement, you remain in control of matters such as property division.

With a successful settlement, you may be able to negotiate to keep 100 percent of your pension plan. You could offer your ex something else in return, such as less of the marital debt. With a settlement, your case will not have to go to court and a judge will not give 50 percent of your pension plan to your ex.

You can increase your chances of achieving a settlement with your ex-spouse during a divorce case by hiring a divorce lawyer in Solana Beach to represent you. Your lawyer can attend mediation or arbitration with you to protect your rights and best interests during divorce settlement negotiations.

An attorney can help you compromise with your ex and come up with creative solutions that work for both of you. If there are ways you can protect your pension plan from going to your ex-spouse, your attorney will find them.