Experience and Care You Can Rely On

Can I offset my pension against other assets during the divorce?

On Behalf of | Sep 18, 2023 | FAMILY LAW - Divorce, Property Division

Negotiating a division of property with an ex-partner can be tricky. While you have to maintain an amicable attitude and show willingness to compromise, you must also develop strategies that would provide you with the most favorable outcome.

For instance, if you are dealing with multiple properties in a divorce, a strategy is to offset certain assets against others if you believe it will benefit you in the long run.

Offsetting: A common practice in divorce

In New Jersey, courts divide assets and debts fairly and equitably between divorcing spouses. They usually do this by assessing the value of all marital properties and adding them to come up with a total value of all assets. The court then awards each spouse a fair percentage of that total value.

Parties who decide to settle privately can follow this structure. However, putting all assets into the division pool may be too complex, especially with the unique nature of certain properties like retirement plans, when spouses can just keep those assets as is.

A great example of this is pension offsetting. With this strategy, each spouse keeps their respective pension assets. If one spouse has a larger pension fund, the other spouse can take a marital property of the same or similar value to offset the difference between their pensions.

Determining whether the strategy works for you

While offsetting in divorce property division is a way to keep things simple, it also has drawbacks. For one, the pension amount may be a material factor since small pensions may not be cost-efficient. Whether this strategy will work in your case depends on the available circumstances and whether the advantages outweigh the disadvantages and vice versa.