2024 How Does a Divorce Affect My Pension in Louisiana?

In Louisiana, the state recognizes marital, or community, property, which decrees that any assets or debts collected during the marriage of two people are equally shared between them. Examples of community property are the marital house, loans, earned income, and retirement funds such as a pension. Marital property is significant during the division stage of a divorce. If you are approaching or amidst a divorce and have pension concerns, talk to a Louisiana divorce lawyer.

Separate Property Is Protected in Louisiana

In contrast to community property, separate property is whatever property (finances, possessions) and liabilities a spouse obtained prior to the marriage. Each spouse’s separate property is not subject to division during a divorce and remains in their independent ownership. Additionally, any property accrued by either spouse after legal separation or divorce is viewed as separate property.

Any retirement funds that were collected before or after marriage also apply. Only the portion of a spouse’s pension that was received while married is subject to equal division and granted to the beneficiary spouse.

For example, if a spouse earned a pension for two years prior to getting married and earned four more years of pension before getting a divorce, the other spouse is only entitled to half of the pension accrued during the marriage, which is two years’ worth.

The pension from the initial two years prior to marriage, the remaining half of the retirement funds whilst married, and any pension earned after the dissolution of marriage is separate property belonging solely to the spouse who owns the account.

How Pensions Are Appraised and How Assets Are Divided

Any retirement accounts will be analyzed and assigned monetary value by financial professionals that your divorce lawyer will request the service of. These financial analysts will consider the current value of all relevant accounts when the funds become available (vest) and the value of the accounts at the time they vest or when a spouse can first withdraw/cash the funds.

With the retirement accounts valued, the spouses can discuss together, along with their mediating attorney or individual legal counsel, whether either one would like to trade their right to half of the applicable funds in exchange for a different asset, like a business or a house. If neither spouse wishes to waive access to their entitled half, they will receive their funds in the method and time outlined in an agreement, often a qualified domestic relations order (QDRO).

The remaining properties will be divided evenly between the spouses, whether in court or in the division stage of a mediation. Each asset will either be split evenly, unequally, or given in its entirety to one spouse—whichever course of action ultimately results in each person obtaining property equal in net value to the other’s.

Getting a Qualified Domestic Relations Order

A qualified domestic relations order (QDRO) will often be instigated in divorce divisions with retirement fund accounts, especially if there is a pension plan. Both defined benefit (traditionally earned with monthly payments) pension plans and defined contribution (individual savings accounts like a 401k) pension plans require a QDRO. It is a lawful decree and the proper method of paying someone other than the account’s administrator.

The owner of the pension requires a court order for the beneficiary spouse to receive payments from the divided retirement fund. This document outlines how, when, and the dollar amount (or percentage) each spouse will receive from the pension once the funds are available.

The beneficiary spouse’s portion isn’t subject to taxes if placed into another retirement account. If they choose to take the funds as income, taxes will need to be paid on it. If the spouse decides to take half of the funds before turning 59 and a half years of age, they are subject to an early withdrawal penalty according to Louisiana law.

FAQs

Q: How Are Pensions Divided in Divorce in Louisiana?

A: Pensions and any other retirement funds that were accumulated while married are considered marital property in the state of Louisiana and are included in the division of assets. Any retirement assets that were collected before or after the marriage’s duration are viewed as individual, separate property and typically not subject to division.

Q: Can My Ex-Wife Claim My Pension Years After Divorce?

A: During divorce divisions, a qualified domestic relations order is commonly drafted for retirement accounts and in order for the beneficiary spouse to receive payments from the divided retirement fund. This agreed-upon court order prevents any additional transactions not outlined, and the ex-spouse only receives the initially allotted portion of the pension years after divorce.

Regardless of opting to use a QDRO, ex-spouses are not entitled to retirement funds accrued after the divorce since it’s not community property.

Q: How Do I Protect My Pension in a Divorce?

A: Your divorce lawyer will have your assets appraised, and once the pension has an assigned value, your attorney will go over the assets in a meeting with you and your spouse. Either spouse may elect to waive their right to a portion of the pension in exchange for receiving other assets, like the marital house. If neither wants to trade off, then the designated share of your pension given to your spouse will be finalized in a court order.

Q: What Is a Wife Entitled to in a Divorce Settlement in Louisiana?

A: Each spouse is entitled to an equal half of all assets and liabilities. The court divides all marital property, allocating certain assets and debts to each individual. An asset may be unequally split, given entirely to one spouse, or equally divided so that the individual properties are equal in net value.

Sometimes, the court will need to order an “equalizing payment” for one spouse if the spouses’ properties aren’t equal after all available assets have been allocated.

Don’t Worry About Your Pension and Other Assets

If you’re worried your spouse may try to take more than what’s fair while dividing your marital property or otherwise put you at a disadvantage, schedule a consultation with a divorce attorney from Magnolia Law today. We can outline an overview of your options, the overall process, and what we can do for you during the divorce proceedings.