Originally Posted: July, 2019
Updated: January, 2024
When a marriage ends, deciding the equal distribution of assets to each person is a necessary step. Under the law, the value of any kind of property or assets that was acquired by a spouse during marriage and exists at the time of divorce must be divided equally. This covers pension and retirement funds.
Every divorce is different. Usually, the division of property and assets involves a spouse receiving an equalization payment. An equalization payment is money one spouse pays to the other to divide the increase in the value of the couple’s property during the marriage. The spouse with the larger value of property subtracts the other to find out the difference. That difference is then divided in half to determine the equalization payment that the first spouse pays to the other.
Generally, the maximum amount of the pension paid to the plan members’ ex-spouse is 50% of the value of the said pension.
Your retirement is one part of the division of assets
Your retirement funds are just one piece of property that needs to be considered in determining each spouse’s financial contribution. All property and assets need to be included in the calculation of how they will be divided.
Valuing your pension
Dividing pensions can be complicated, and some background research should be done first. You need to understand what type of pension or retirement fund you have and know if it follows federal or provincial law. Furthermore, is it a Defined Pension Plan (DPP), or a Defined Benefit Plan (DBP).
The valuation provides an estimate of how much each spouse will likely receive if the pension is divided. You can apply for this to be done by contacting the person or group who manages the pension and/or fund. You may be charged a fee for valuing the pension.
Splitting your shared property instead of your pension
You and your ex may decide instead that one partner may pay the other the agreed upon amount at the end of the divorce with money from another source or asset. You and your ex may sell your home for example, or simply transfer your interest in the home to the other. You could pay what’s owing to your ex from those funds or the transfer, rather than split your pension.
Dividing your retirement funds
If you’re already divorced and have received a court order, arbitration award or domestic contract, there may be rules on how your funds are divided. If that is the case, the fund or plan can pay out your ex immediately. Also, if your pension is in pay the fund is treated differently under the law.
What can you do if your spouse is attempting to take your retirement funds or pension plan in a divorce?
The best case scenario is to have a prenuptial agreement prepared when you marry your spouse to prevent significant losses. However, if you do not have a prenup and your ex-spouse is seeking parts of your pension or retirement fund, there are some steps you can take.
- Speak with an experienced family lawyer: it is important to consult with an attorney who has ample experience dealing with complex family law cases. Contact Epstein & Associates for your free consultation.
- Negotiate an agreement: If possible, negotiate with your ex-spouse. Sometimes, a mutually agreeable solution can be found, such as offering other assets in exchange for retaining more of your pension. Your lawyer can represent you throughout these negotiations.
- Explore mediation or collaborative family law: Before resorting to litigation, consider mediation or collaborative law. These approaches involve negotiating with your ex-spouse, which often leads to more favourable solutions for both parties.
- Prepare for litigation: If you are not able to come to an agreement, your next step is to go to court. Your lawyer will provide evidence and represent your best interests throughout the trial.
When to seek advice
When splitting property and assets during a divorce, there are a few necessary steps you need to take. Talking to a professional family lawyer about your situation can offer clarity and prevent roadblocks. Chat with one of our divorce lawyers today for a free consultation on how we can guide you through the process.