A common question during a divorce is how assets, including pensions and retirement benefits, are divided during the process. Pensions and pension credits earned during a marriage can form a significant portion of the combined wealth between a couple. While one spouse technically earns each pension or retirement benefit, these accounts are typically family property by law.
As a result, dividing pension and retirement benefits in a Hamilton high-asset divorce can be a challenging and fiercely fought aspect of this process. The skilled high-net-worth divorce lawyers at The Riley Divorce & Family Law Firm could step in and help you understand while negotiating a favourable outcome for after your divorce.
When you or your spouse contributes to pensions or retirement accounts during your marriage, any increases in value to those accounts are considered family property. The province’s asset division rule subjects pension and retirement funds to equal division to ensure each spouse profits when entering a divorce.
To calculate the value of a pension during a high-asset divorce case in Hamilton, the Ontario Pension Benefits Act s. 67.2(1) requires a family law evaluation (FLV) from the administrator of the pension fund. This way, a spouse’s contributions to the pension during marriage and its corresponding increase in value can be fairly determined.
The FLV for the pension is then used as part of the pensioner’s net family property calculation. Whether the pension must be shared or kept with the pensioner depends on other financial factors and the balance of assets and debts between the parties involved. Our experienced lawyers with strong backgrounds in high-asset property division could help you understand how an FLV works and any potential tax consequences.
The Canada Pension Plan (CPP) provides Canadian workers with credits based on their employment income. Even when one partner does not contribute significantly, they could be entitled to a share of those credits during a divorce.
CPP credits can be split equally based on the time a couple has lived together and are permanent once they are split. CPP equalization is more common when one spouse earned significantly more credits than the other during the course of a marriage. If CPP credits are roughly similar, equalization might not be required. Our lawyers could investigate and help reach a fair outcome when CPP credits are involved in a high-asset divorce proceeding in Hamilton.
Other retirement funds can be subject to division during divorce, with each having its own tax implications. It is critical to work with knowledgeable tax professionals and lawyers with experience handling retirement benefits. Higher income earners often use Retirement Compensation Arrangements that must be accounted for during divorce and typically calculated using an FLV.
Registered Retirement Savings Plans (RRSPs) are tax-deferred options that people can use for retirement savings. If one spouse contributed significantly more to an RRSP than the other, they could qualify for a tax deduction by contributing to their spouse’s RRSP account. Our lawyers could help evaluate any retirement benefits involved during a high-asset divorce in Hamilton.
Dividing pension and retirement benefits in a Hamilton high-asset divorce requires detailed knowledge and experience. Going forward without proper legal guidance could lead to negative tax consequences and financial losses. The Riley Divorce & Family Law Firm could help you understand your options and how to best preserve wealth during a divorce. Call our legal team today to discuss your next steps.
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