An important part of a divorce proceeding is the division of property. An individual's pension and/or retirement accounts earned and/or acquired during the course of the marriage will be included as part of the marital property that is divided.
Pensions
Under Illinois law, both vested and unvested pensions can be considered marital property. Marital property is all property acquired by either spouse during the course of the marriage. Anything considered marital property must be divided equitably. It does not make any difference which spouse actually earned the pension or whose name the pension is in. An equitable division of property means that the property is divided fairly; however, it is not necessarily divided equally. In some cases, one spouse may be awarded a significantly greater amount of the marital property than the other spouse.
Retirement
There are several different types of retirement plans, but two general forms include the following:
- Defined Contribution Plans: Under these plans, the employer and/or the employee make specific contributions to the account. These include 401(k), 403(b), and other plans.
- Defined Benefit Plans: Under these plans, an employer commits to provide a benefit to an employee at some point later on, with the amount determined through the use of a formula. The present value of the plan is more difficult to determine than defined contribution plans.
If the divorcing parties share in each other's private pension or retirement plan, a qualified domestic relations order (QDRO) must be entered with the court. This is an approved order that informs the plan administrator that another party has a right to all or a portion of the benefits payable. The QDRO sets the specifics of the distribution, including how much each party will receive, when benefits will be distributed, and how the benefits should be distributed.
If the divorcing parties share in each other's public state or local government pension or retirement plan, a Qualified Illinois Domestic Relations Order (QILDRO) must be entered with the court. This is a state approved order that informs the state or local government plan administrator that a former spouse has a right to all or a portion of the benefits payable.
Family Law Attorneys
The process of divorce can be complicated, particularly when it comes to the division of property. However, the resolution of these issues is one of the most important components of divorce. If you would like more information about the valuation and division of marital property at divorce, speak with an experienced Illinois family law attorney at MKFM Law today. We provide compassionate legal representation to individuals dealing with the process of ending a marriage. Call 630-665-7300.
