Pension Money: Property or Income, not Both

When someone getting divorced has a retirement benefit or retirement income, their spouse may want to receive part of it as alimony. However, at the time of the divorce, the value of the pension interest is typically divided between the parties as part of the property settlement in the divorce. So an issue may arise as to whether to characterize the pension value as property or as income.

Take, for instance, a case where the husband gets the pension and, in consideration of that, the wife get the house. In that instance, the pension is part of the PROPERTY settlement, and is not considered income. If the wife seeks alimony from the husband, his money from the pension should not be factored into the determination of alimony. It would not be fair for him to pay alimony from his share of the property settlement when he will not, in turn, receive any of the equity in the home.

On the other hand, if the pension is NOT divided between the parties, for instance, because the husband is already receiving his pension payments at the time of the divorce, then the pension is INCOME, rather than property. Since the value of the pension is not part of the property settlement, the money received from the pension plan MAY be considered in the determination of alimony (also known as spousal maintenance).