If you are preparing to file for a divorce in Kentucky, and you earn a pension, you need to know how to protect your pension if at all possible. Most pensions cannot be touched until the recipient has retired, which means if you withdraw money prior to retirement, you will be penalized. But what happens if you get divorced prior to reaching retirement? What happens to the pension?
For the most part, both spouses will be required to complete a Qualified Domestic Relations Order (QDRO) when going through a divorce with a pension. The QDRO makes it possible to transfer a share of the pension’s benefits to an account for each spouse. This makes it possible that taxes and penalties are only paid on each individual’s share of the pension.
An excellent way to protect your pension when going through a divorce is to offer your spouse an alternative. You don’t necessarily have to give your spouse half of the pension you’ve earned. Instead, offer other assets that might entice the spouse to stop asking for a share of the pension.
You could offer your spouse the marital home outright, an expensive car, your boat, your prized art collection or any other asset of high value. Your spouse does not have to accept this offer, but it doesn’t hurt to ask.
As you can see, there are different rules for dividing a pension in Kentucky based on the type of pension you have earned. Make sure you review the rules of your specific pension and have an attorney explain to you what will happen when you file for divorce.