If I Get Divorced in Utah, What Happens to My Pension?
Thousands of Utahans have a pension, and thousands of Utahans file for divorce. Where the two groups overlap, some important legal question arise. What will happen to my retirement savings if I ever get divorced? And how much money can my spouse get? In this article, West Valley City divorce lawyer Darwin Overson will explain how Utah divides pension money when a marriage is dissolved.
The Woodward Formula: How Utah Calculates Pension Rights in Divorce
In 1982, the Utah Supreme Court ruled in Woodward v. Woodward that pension plans accrued during a marriage were “subject to equitable distribution.” However, the term “equitable distribution” has a slightly unusual meaning in this particular context.
Most of the time, equitable distribution means that the courts will take a variety of factors into consideration in order to divide property in the fairest way possible – not the evenest way possible. Therefore, if one spouse earns significantly less than the other, the spouse with lower income might be awarded a greater share of assets and possessions.
With the Woodward decision, the Supreme Court created a specific formula:
“The wife [should] receive one-half of the benefits accrued during the marriage, regardless of the length of time the husband continues in the same employment. Whenever the husband chooses to terminate his government employment, the marital property subject to distribution is a portion of the retirement benefits represented by the number of years of the marriage divided by the number of years of the husband’s employment. The wife is entitled to one-half of that portion.”
Here’s another way of describing the same formula:
- Start with half the value of the retirement account.
- Multiply it by the number of years the marriage lasted.
- Divide that number by the number of years the employee worked.
Let’s insert some dollar values and see how the formula works out in real life, using the steps we just described.
- Imagine the account is worth $30,000, meaning half the value is $15,000.
- Let’s say the marriage lasted for seven years, which multiplies against the half-value of $15,000 to a total of $105,000.
- Let’s say the employed spouse worked for 12 years, which gives us a final total of $8,750.
Let’s do another example with the same account value to see how the math changes when the marriage is slightly longer, but the period of employment is slightly shorter.
- Half the account’s value is $15,000.
- Let’s say the marriage lasted for nine years, which multiples to $135,000.
- Let’s say the employed spouse worked for 10 years, which divides to about $13,500.
Let’s do one more, this time with a slightly shorter marriage, but a slightly longer period of employment.
- Half the account’s value is $15,000.
- Let’s say the marriage lasted for five years, which multiplies to $75,000.
- Let’s say the employed spouse worked for 14 years, which divides to approximately $5,360.
What is a Qualified Domestic Relations Order (QDRO)?
As you can see from the above examples, small shifts in the marriage-to-employment ratio can have fairly dramatic financial impacts. However, while the formula is a critical starting point, it’s not necessarily the final deciding factor. In an effort to ensure that the division is as fair and reasonable as possible, the courts will also consider the impact of factors like the date you and your husband or wife separated, and whether the pensioner did anything “unreasonable,” such as deliberately destroying marital property, or withdrawing funds from the account in an deliberate effort to conceal assets from the other spouse.
Importantly, a pension cannot be divided between spouses without a document called a Qualified Domestic Relations Order, or QDRO, which must be signed by the judge. Unless a QDRO is signed by the judge, funds from the account cannot be redistributed to the spouse who did not contribute to the account. In addition to being signed by the judge, the Qualified Domestic Relations Order must also be approved by the pension plan administrator, at which point the administrator will split up the funds in the account based on the provisions of the QDRO.
If you’re thinking of filing for divorce in Salt Lake City or the surrounding counties, call family law attorney Darwin Overson at (801) 758-2287 to set up a free and completely confidential legal consultation. Darwin has years of experience handling a wide variety of legal matters related to family law, including divorce, child support, child custody, and alimony. You will not be charged any fees for your consultation.