Most people are concerned about the prospect of sharing their pension with their soon-to-be ex -spouse. In fact, they are so concerned that they literally come into my office with the goal of having their spouse waive their pensions in exchange for keeping the family home or other real estate. Although this may seem like the best idea, no one should make that decision without analyzing the financial impact of that sort of agreement.
The financial impact can only be determined once you have had your pension/retirement account value calculated and have tax-impacted that value –tax impacting simply means to consider the amount of taxes you will pay on that pension/retirement money once you start receiving it— and compared the values of the pension and the home equity. For instance, if the marital share of your pension is only worth $50,000.00, yet your share of the equity in the former marital home is $100,000.00, certainly it would be financially beneficial for you to give your spouse their $50,000 interest in your pension and to take your share of the former marital home equity. You could use the money from the equity in the home to invest in a retirement benefit, thereby replacing the money given.
Working with a competent and experienced family law attorney and financial planner will give you the tools you need to turn the fear of sharing your pension with your spouse into power by arming yourself with the information you need to make the right choice for your financial future.