For many divorcing couples, one of the larger and more important assets is often retirement benefits. To the extent the pension or other retirement asset was earned during the marriage it is community property and subject to division in the divorce, while whatever portion was earned before the marriage of after the date of separation is not. Assessing how much of a retirement benefit should go to a former spouse can involve some complicated calculations.
An example of a couple dealing with this issue was the recent case of Joseph and Cathye. Joseph was a 30-year veteran of the Los Angeles Police Department when his pension became effective in 2004. From 2004 forward, Joseph continued working for several years under a deferred retirement option plan. Eventually, in 2009, Joseph transferred all of his pension funds into an IRA. That sum was $700,000.
From 1984 to 2011, Joseph was married to Cathye. A key issue in the divorce was the division of Joseph’s pension funds. In this case, the wife’s portion was calculated using something called the time rule. The time rule meant that the court took the time that Joseph worked for the LAPD during his marriage and divided it by Joseph’s total time of service. The court then multiplied that fraction by the husband’s monthly pension amount. The amount yielded from that math equation was the community property portion of the pension, which meant that Cathye got one-half of that amount.