California is a community property state, meaning any property acquired during your marriage will be divided equally when you separate.
That being said, it is crucial to understand the financial consequences of the divorce, especially regarding your pension.
A pension is considered community property
Unlike many states that adhere to the equitable law, California abides by the community property law. Because couples are considered a community, any property acquired during marriage is subject to this law. In addition, your spouse can be entitled to up to 50% of your pension in case of a divorce.
Are there ways to protect your pension plan?
You can protect your pension plan from being split in a divorce in the following ways:
- Prenuptial agreements: If you are still unmarried, you can protect your pension using a prenuptial agreement. Having this agreement in place means you can keep your pension separate (non-marital) property and avoid shared distribution with your ex.
- Postnuptial agreements: A postnuptial agreement, which is signed after a marriage begins, can also protect your assets and pension plan in case of a divorce. Essentially, this is a private (but enforceable) contract that can allow both you and your spouse to carve out exceptions to the community property rule.
- Out-of-court settlements: Couples in California are allowed to work their issues out of court. So, you can save your pension by offering your ex something else of value in exchange. This is commonly done.
When you go through a divorce, it’s possible that your spouse may claim a portion of your retirement benefits. However, experienced legal guidance can help you find a way forward.