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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 Fees, penalties and taxes can often destroy a pension that is withdrawn when it is not fully matured.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.
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Under current Ohio law, grandparents are permitted to petition the court for visitation rights with respect to their grandchildren. One would think that such a petition would not be necessary, but, unfortunately, more than we would like to think grandparents are prevented from seeing thier grandchildren. Quite frequently, grandparents turn to the courts in order to have the opportunity to spend time with their grandchildren. This often comes up as a problem when a couple divorces and whomever is chosen as the residential parent does not want his or her former in-laws to visit the children. Therefore, grandparents need to be aware that if the Court finds that it is in the child’s best interest to have visitation with his or her grandparents, they do have legal recourse. However, it must be noted that the Court is required to give some special weight to the wishes of the parents as to whether the grandparents are granted the right to certain visitation with the children.
This does not mean that the parents wishes control the Court’s decision, but that if the parents feel strongly against visitation, the court must consider that fact. But even if the residential parent does not want to allow the visitation, the Court can , and often does, grant the visitation if it is in the best interest of the child. There are specific stautory provisions that cover the visitation rights of grandparents in Ohio, so you should seek the advice of counsel to determine if your case is worth pursuing.
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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, 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.
I was looking over the Morrison & Nicholson Ohio Law Blog webstats the other day and noticed that quite a few people were looking for information about Ohio’s dissolution of marriage process and whether or not a lawyer is required. Thus, this blog entry was born: What is a dissolution and do I Need a Lawyer for an Ohio Dissolution of Marriage?
In most states the term dissolution refers to a traditional divorce proceeding. However, in Ohio a dissolution of marriage is a statutory alternative to a divorce proceeding in which husband and wife both agree on parental rights, spousal support, and division of personal property, contained in a document called a separation agreement. The husband and wife then file the a dissolution petition to the court, attaching the separation agreement and various other forms, asking the court to issue a decree.
Ok, so you have googled “dissolution of marriage in Ohio,” purchased the forms from an online legal form vendor for 300 bucks and now your thinking about all the money your going to save by not having to hire a lawyer. Can this work? Yes, it can. A lawyer is not necessarily required to get a marriage dissolution. However, before you go that route keep in mind that many of these online forms warehouses give little or no instruction as to filling out the forms and the process of filing. Furthermore an attorney can help negotiate, advise, and protect your interests. For those of you willing to bear the storm I hope that this blog entry will at give you a big picture perspective of the process itself.
Before you order anything online you should stop by your local county clerk’s office (normally the Division of Domestic Relations) or the website and take a look at the forms that are required for a dissolution. Doing so will give you a better idea about whether this is something that you would like to tackle yourself. Also, the people working in the Clerk’s office are generally not very helpful as they are not allowed by law to give legal advice, don’t say that I didn’t warn you.
After you have have all the required forms properly filled out you then submit them to the court. A petition hearing date will then be set anywhere from 45-90 days later. At this hearing a judge will ask you and your spouse a few questions then she will issue the decree of dissolution and voilia, your marriage is dissolved.
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