Assets acquired before marriage are generally excluded from the marital estate. However, earnings that occur during the marriage on previously owned assets, such as pensions or other retirement accounts, might be subject to property division.
In Michigan, an equitable distribution of a retirement account may not necessarily require an even split of payments from a pension. Rather, a court might endeavor to reach a fair allocation based on factors such as the length of the marriage and the degree to which the asset increased in value during the marriage. Since this calculation might be complex, it is a good idea to consult with a divorce attorney regarding your rights.
Pensions are particularly complex because they implicate both federal and state law. Pensions earned during a marriage are considered a joint asset, so the state divorce court must decide how those retirement accounts should be divided. However, federal law also requires the divorce court to issue a qualified domestic relations order before any portion of a retiree’s private retirement plan or pension can be assigned to another payee.
Specifically, the Employee Retirement Income Security Act of 1974 (ERSIA) allows assignment to a spouse, child or other dependent. A QDRO is often issued as part of a divorce proceeding, but there are other types of domestic relations situations where it might be warranted. The QDRO should specify the amount of payments during the employee’s or retiree’s lifetime, as well as any survivor’s benefit. The process is simplified in the event the plan administrator has its own version of a QDRO, but it is a good idea to have your own divorce attorney review a QDRO before agreeing to its terms.
Source: “Pension Rights After Divorce,” copyright 2016, Pension Rights Center