How pensions are handled upon divorce may depend on a potentially important distinction. This is the difference between “vested” and “non-vested” pension. A pension is generally considered vested if the recipient cannot lose the pension by being fired. If a pension is vested it is usually considered marital property.

If a pension is non-vested, whether or not it is marital property will vary from state to state. Some states find that non-vested pensions are too speculative to be included as marital property and other states, including California, find just the opposite. In states that do consider non-vested pensions as marital property determining the value of that property can be a problem. A common solution is to award each spouse a portion of the pension as and when it is paid.

Another important factor is whether the federal government is paying the pension. Because federal law can trump state law, frequently federal benefits are not subject to division by state divorce court. For those in the military the Uniformed Services Former Spouses’ Protection Act sets forth specific parameters that must be met before a benefit can be divided to a spouse upon divorce. This includes that the marriage must have lasted for at least ten years.