In an Illinois divorce, marital property is subject to an “equitable division” between spouses. Marital property is basically all property acquired during the course of the marriage. When considering this equitable, or fair, division, there are some marital assets that are easier to divide and distribute than others. For example, if there are two cars from the marriage, or a joint savings account, the spouses and the court should not have much trouble figuring out that division. On the other end of the spectrum, dividing a pension can be more difficult.
Is a Pension a Marital Asset?
A pension plan is considered marital property. Even if the pension has not yet vested at the time of divorce, it is still considered property that was earned during marriage. However, contributions made into a pension plan prior to a marriage are considered separate property, which means that it is not subject to the divorce division.
Putting a value on a pension can be tricky, as there are different types of pension plans and different valuation methods. The best course of action is to hire an attorney with knowledge and experience in these methods. This is important because the spouse with the pension will generally attempt to under-value the pension, while the spouse seeking to divide the pension will attempt the highest possible value.
How is a Pension Divided?
When the court makes an equitable division of the value of the pension, there are two common distribution methods. The first option is to take that equitable value of the pension and to offset that amount with other money or property, while leaving the pension untouched.
The second option is for the court to divide the pension and enter a Qualified Illinois Domestic Relations Order (QILDRO). A QILDRO was established by the Illinois Pension Code and orders the pension’s administrator to pay a pre-determined percentage of the pension to an alternate payee when the person with the pension retires. The reason that this order is necessary is because the spouse with the pension plan cannot actually access the pension until it vests or at the time they retire. It is incredibly important that this QILDRO strictly complies with the Pension Code, as pension administrators may not honor a defective order.
You Need an Attorney
Divorces are complex, especially when a pension is in the mix. You need an experienced family law attorney who understands pension valuations and QILDROs. I have over two decades of experience and can help you get things right. Contact The Law Offices of Robert S. Thomas at 847-392-5893 or visit our website today.