One of the most important parts of divorce is determining what is marital and what is separate property. Typically all assets acquired during the marriage are deemed to be marital property in a Massachusetts divorce. You may be wondering about your pension, since it’s paid out in installments. Usually, a pension is treated as a marital asset acquired during the marriage and subject to division at the time of divorce. Occasionally a pension is treated as one party’s income, which should be shared on an ongoing basis like alimony, just as with income from a job.
In a recent Massachusetts divorce case [link to Mass Lawyers Weekly article], a judge decided that a husband’s pension should be treated as an income. The judge’s ruling was vacated on appeal as the judge didn’t adequately justify her decision. However it’s worth looking at the rationale behind why this judge or any other judge might treat a pension as income.
In Booth vs. Booth, the judge ruled that the husband’s pension should be treated as income due to financial uncertainties in the couple’s future. The husband faced a potential loss of police detail income, and the wife had no way of knowing how long she would be caring for her mother and what kind of job prospects would await her when her mother passed away.
As mentioned, pensions are most commonly treated as assets in a Massachusetts divorce. A pension is treated as a guaranteed asset rather than earned income. This means that the marital portion of the pension is divided between the divorcing spouses at the time of divorce. The decision to treat the pension as income rather than an asset sometimes happens when one spouse is already receiving the pension as if it were income. It can also happen when there are mitigating circumstances. In Booth vs. Booth, the appeals court did not disagree with the judge’s concerns regarding the couple’s future, but they did decide that the judge had not adequately justified her decision on the matter.
The important thing to remember is that the decision to treat a pension as an income rather than an asset often works out unfairly for the party who is receiving a smaller pension or no pension and who earned less during the marriage. Instead of being entitled to a share of the total asset as if it were divided as property during the marriage, the spouse is entitled to a share of each payment as alimony, i.e. a percentage of the monthly asset that makes up the difference between the two incomes.
Not surprisingly, this method of dividing marital property is unpopular. When you are getting a divorce in Massachusetts, you need to be aware that it is not likely that your pension will not be treated as your “income” to be doled out as alimony. In most cases, it will be divided and your benefit will be substantially reduced at the time of divorce. Regardless, nobody getting a divorce should take for granted that a divorce will go exactly as planned and in a way that’s favorable to them.
Your Massachusetts divorce attorney should be careful to cover all bases in your divorce so the judge won’t come to the conclusion that you should be entitled to less of your spouse’s pension based on circumstances. On the flipside, if you would prefer that your pension be treated as income, there may be circumstances that could justify it, but no way to guarantee that outcome in court. A skilled Massachusetts divorce attorney will advise you on your case and the best approach for ensuring your retirement income stream is secure. If you are considering retaining a divore attorney and want to understand all your options, then please call us at (978) 341-5040 for a consultation today.