Protecting Community Assets in Divorce: Employment-Related Benefits
During the course of a marriage, spouses often accumulate a number of employment-related benefits, such as pension plans, retirement plans, deferred compensation, stock, bonus income, and severance pay. There is a wide range of employee benefits, provided by both private and public employers.
Step 1: Ascertain the Benefits
Employee benefits should be ascertained at the outset of any dissolution or legal separation proceeding. A careful analysis of the community or separate property nature of such benefits is required. While each spouse has a fiduciary duty to provide the other with full financial disclosure, employee benefit information may be difficult to gather. Spouses are often not fully aware of their benefits, or the benefits of their spouse. Steps should be taken to ensure accurate and thorough disclosure. A chronological list of employment history may provide a good starting point. However, in order to yield pertinent data, formal discovery tactics may be required.
Step 2: Value the Benefits
Many spouses do not realize that an employee benefit may have tremendous value. Benefits earned during marriage and before separation are presumed to be community property. Therefore, each spouse has an interest in the asset. Unless the benefit is divided in kind, a valuation is required to ascertain each spouse’s share. The most common approach in determining the community and separate interests is the “time rule.” Under this rule, the community interest is valued from the service accumulated in the years between the date of marriage and the date of separation.
Step 3: Divide the Benefits
The Family Code authorizes the court to make whatever orders are necessary or appropriate to ensure that each party receives their full community property share. In order to make a fair and equitable division, the court will take into consideration the facts of the case, and the needs and economic circumstances of the parties. A court order concerning employee benefits should be sought promptly. The employee spouse may pass away, remarry, or retire before the benefits are divided. Hence, failure to secure such court orders may result in partial or complete loss of the benefit.
Should you require legal assistance, contact the attorneys at Bremer Whyte Brown & O’Meara, LLP. The family law attorneys at Bremer Whyte Brown & O’Meara, LLP will work with you to ensure full realization of your entitled benefits and a fair division of those benefits.