Understanding your pension rights in a New York divorce

In a divorce, a couple splits their marital property. Marital property is everything, with a few exceptions, earned during the marriage. Inheritances, for example, are not split.

Many working spouses contribute to a pension and/or receive contributions from their employer. There are various types of pensions plans. Public sector employees may receive what is known as a 403(b) plan, private sector employees may receive a 401(k) plan. There are other types of retirement compensation plans, too, such as an IRA. If a couple is getting divorced, then how will its pension or pensions be split? The court will make a decision and that order will, generally, follow a 1984 New York State landmark case known as Majauskas v. Majauskas.

What is the background to Majauskas?

A man appealed his divorce case to the New York State Court of Appeals to overturn two lower court’s rulings. In those rulings, the courts decided that a pension was marital property, which must be equally divided between the spouses upon divorce. In fact, the initial judge gave the husband three options to pay his wife: an immediate lump sum payment, a lump sum payment later on with interest or as half of his pension checks as received them.

The wife argued that pensions are included in marital property under New York State’s Domestic Relations Law. The husband argued they are not marital property because they only became property once they mature, or are paid. Since he had not yet retired and was not receiving payments, he reasoned that his wife should not be entitled to receive any part of his pension. The judges agreed with the lower courts’ decisions on the matter of the pension.

What does Majauskas say and how does it affect me?

The appeals court wrote that someone can only claim a part of spouse’s pension that resulted from contributions made while the couple was married (more specifically, from the day the couple married until the day the divorce action was brought forth). The decision solidified marriage as an “economic partnership.”

In general, in a divorce, each spouse is entitled to half of the other spouses’ pension that was earned during the marriage. So the formula is: 50% x (the total pension) x (the fraction representing the duration of the marriage with respects to the duration of pension contributions). There are firms that make precise calculations that the court can choose to accept in the form of a Domestic Relations Order (DRO) or Qualified Domestic Relations Order (QDRO). If you are considering divorce, then let the attorneys of Eskin & Eskin, P.C., help you through all stages of the divorce. With over 40 years of combined experience, they will fight for your rights, including pension rights, during every step of the way. Visit www.EskinAndEskinLaw.com to learn more about our firm and call 718-402-5204 for a free consultation.