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Dividing Pension & Retirement Benefits in Ohio Divorce – Part 1

dividing_retirement

In the first installment of what is planned to be a series on dividing retirement / pension benefits during a divorce settlement, we look briefly at the common questions of dividing retirement and pension plans between spouses.  The parties’ retirement benefits is an important consideration when equitably dividing marital property, because, like the marital residence, retirement benefits are often the largest asset or assets of the parties. Therefore, dividing these plans or funds becomes enormously important.  So, let’s now address some common questions.

Is my retirement / pension considered marital property?

As the intro gave away: yes.  Just as with any other asset of value that is acquired during the marriage, generally, retirement benefits accrued during the marriage are considered to be  “marital assets” and must be divided equally between the parties.  If a spouse is working during the marriage and this results in the accrual of retirement benefits, the law sees it as if the non-working spouse contributed equally to the creation of those benefits.

This frequently makes it difficult for a court to carry out its statutory mandate of dividing all marital property equally.  Technically, the non-working spouse is entitled to at least a portion of the employed-spouse’s pension fund (as marital property), but the money may not be easily accessible at the time of divorce.  Because courts like to maximize the value of all retirement and pension funds, it is normally preferable to avoid causing the withdrawal of the accrued monies, and leave the fund growing in the name of the working spouse.   Fees, penalties and taxes can often destroy a pension that is withdrawn when it is not fully matured.  But, the problem is that sometimes there simply isn’t other marital property to award to the other (non-earning) spouse at the time of the divorce that will adequately compensate that spouse for his or her rightful portion of a retirement fund.  For this reason, valuing and dividing retirement benefits should be one of the first issues contemplated by a divorcing party.

Is it true that my spouse is entitled to half of my pension?

No. Not always.  Only the portion of the retirement fund that was contributed to or earned during the marriage is considered “marital property” and subject to division between the parties.  The portion of the retirement fund that was earned by the working spouse while unmarried is considered that party’s separate property and the other spouse has no interest in that money. Therefore, the first step is to determine what portion of the retirement fund is marital and what portion is separate property.

How do you value the portion of the retirement fund that is considered “marital”?

In determining the portion of a pension or retirement plan that is considered a “marital asset” and subject to division between the parties, the court should calculate the ratio of the number of years the employed-spouse worked during the marriage to the total number of years he or she worked at the qualifying employment to earn the pension.  Only the portion of the pension that was earned during the marriage is a marital asset, and the spouse of the employee is only entitled to a proportionate share of the marital asset.

Example – Employed spouse works 25 years to earn a vested pension of $100,000.  10 of these years were worked during the marriage. This equates to a 40% ratio, and only $40,000 of the pension is a martial asset. Because the division of marital property always begins with an equal division, the non-employed spouse would typically be entitled to $20,000 in this scenario.

Now, assuming the court doesn’t want to destroy the fund if it would be better for the employed spouse to contribute for 30 years, you see where it could be difficult to off-set this amount with other marital property? How many couples have $20,000 (in liquid form, moreover) lying around to award the other spouse his or her fair share of this fund at the point of divorce?

Are Social Security Benefits Divided?

No.  Not directly, anyway. Social security retirement benefits are not considered marital assets to be divided when a couple divorces.  A court cannot distribute a portion of one spouse’s SS benefits to the other spouse directly.  However, the court does consider the SS benefits when making an equitable division of retirement benefits overall – See Smith v. Smith (1993, Franklin Co) 632 N.E.2d 555 (“while not divisible as a marital asset, SS benefits must be considered when equitably dividing pension benefits”).

Are State and federal retirement plans treated differently?

Yes. The law related to state and federal retirement plans will be the subject of a later post.  There are specific rules that govern certain public-forms of pensions, such as military pensions, State pension plans (e.g., PERS) and deferred compensation plans.  Those forms of retirement benefits are impacted by specific federal and state statutes that must be consulted where applicable.

Brought to you by the Miami Valley Ohio law offices of Morrison & Nicholson.  Call today to schedule a consultation (937) 432 – 9775.

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Can the Child choose which Parent they want to live with in Ohio?

It is one of the most common myths that people maintain when it comes to child custody: Once a child reaches a certain age, that child can choose which parent to live with, right? Well, that is actually incorrect. However, this myth is based in history and actually grounded is truth. Under former Ohio law, once a child attained the age of 12 years old,child_support_ohio_termination that child had the power to choose which parent was to be deemed the residential parent and legal custodian of that child. However, under current Ohio law, minor children no longer have the ability to choose which parent they want to live with on a permanent basis. In other words, when the Court issues its final divorce decree which, among other things, allocates parental rights and responsibilities, it is not the child that determines which parent is to be the residential parent, even if that child is a teenager. Ohio law treats a 14 year old in the same manner as a 4 year old when it comes to determining which parent with be designated as the residential parent. And, like almost all issues involving minor children, the determination is guided by what is in the “best interest of the child”.

So, divorcing parents, remember that your child will not be choosing for or against you when it comes to custody issues. Rather, the Court will decide and you need to focus your energy on convincing the Court that it would be in the best interest of the child to live with you … do not work on convincing the child that he or she should choose you. Which, in truth, is not fair to the child anyway.

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Montgomery, Greene, Butler, Clark, Miami and Warren County Ohio: Divorce Fact 6/10: How long will my divorce / dissolution case take?

THE TIMING OF THE CASE WLL VARY DEPENDING ON SERVICE OF PROCESS AND THE COURT’S DOCKET: If you are the Plaintiff (filing for divorce first), you must first “perfect service” of process and the court summons on the other party (Defendant) before the court (Greene, Butler, Montgomery, Clark, and Warren County Courts) will schedule a court date.  The Court does not have jurisdiction over the opposing party until he/she has been properly served with the appropriate paperwork.  Service is typically perfected via certified mail, issued by the Clerk of Courts shortly after the case is filed.  Essentially, the Clerk gathers all of the documents filed, creates its own summons, and requests that the postal service deliver the documents to the defendant via certified mail. The Court will not consider service perfected until the U.S.P.S. sends the return receipt to the Clerk of Court’s office.

If the defendant refuses to sign or otherwise claim the certified mail, the clerk of courts will then notify your attorney that service was not perfected.  The attorney will then ask the clerk to “re-issue” service via regular mail, as Ohio law allows service by regular mail if the certified mail was unclaimed or refused by the defendant.  Service can also be perfected via personal service by the county sheriff or a special process server (although these methods are more expensive than certified mail).  Regardless of how service is ultimately perfected, the court will not schedule the case for a hearing until service has been completed.   Further impacting the scheduling of the case is the court’s own docket.  Logically, if the court has a backed-up docket, your case will be scheduled out further than if the court’s docket is not as crowded.   How quickly you receive a court date cannot be controlled by the attorneys.

Brought to you by the Miami-Valley law offices of Morrison & Nicholson.  Author: Charles W. Morrison, Partner at Morrison & Nicholson. Call today to schedule a free consultation with an attorney by calling (937) 432 – 9775.

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Montgomery, Greene, Butler, Clark, and Warren County Ohio: Divorce Fact 7/10: Providing Financial Affidavits etc.

YOU WILL NEED TO PROVIDE CERTAIN PERSONAL INFORMATION: Some Courts have mandatory discovery procedures where each party must voluntarily turnover financial information to the other side (Montgomery County requires mandatory disclosure of financial information).  This helps both parties understand what marital and non-marital assets and liabilities are involved in the case and helps facilitate settlement.  Further, Ohio rules of civil procedure allow each party to demand certain information and answers under oath to certain questions from the other party.  Finally, certain courts, such as Greene County Domestic Relations Court and Montgomery County) require mandatory pre-trial statements be filed with the court (that contain an offer of settlement) that must be completed and exchanged between the parties before the pre-trial with the judge.

Brought to you by the Centerville, Ohio law offices of Morrison & Nicholson.  Call today to schedule a free consultation (937) 432 – 9775.

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