A complex issue our clients often face is the equitable division of pensions and other retirement benefits in divorce. The question of pension division is uniquely complicated in Florida when one of the spouses has accumulated financial interests in a pension as a firefighter or police officer.
Private pension division
A pension is typically a defined benefit plan that pays monthly benefits to the retiree after eligibility begins at retirement. Normally in divorce, it is first determined how much of the pension is marital property, meaning value accumulated during the marriage. (Value accruing before marriage or after filing for divorce is normally nonmarital and not subject to equitable division.)
Equitable division of marital property does not necessarily mean that everything will be split exactly in half. The entire marital estate will be considered as well as all the relevant circumstances of the parties and a division based on fairness will be negotiated or crafted by the judge.
Often, the parties will negotiate (or the judge will order) division of the marital portion of future monthly pension benefits paid after retirement. For example, they might agree to split the marital part of each monthly payment in half.
For private pensions, this arrangement is usually carried out through a qualified domestic relations order, called a QDRO. The QDRO is a court order to the pension administrator that requires future division of pension payments according to the arrangement agreed to or ordered by the judge in the divorce. When the pension payments are eventually made, the administrator distributes them between the two ex-spouses according to the calculations specified in the QDRO.
Law enforcement and firefighter pension division
In Florida, publicly funded pensions such as those earned by police officers and firefighters are governed by specific state laws that differ in some key ways from private pensions. If the officer or firefighter works for the state or a county employer, his or her pension is part of the Florida Retirement System.
The person may work for a municipal government instead, in which case relevant local laws may also impact the division.
State law provides that Florida Retirement System benefits are not “subject to assignment, execution, or attachment or to any legal process whatsoever.” Accordingly, Florida cases have held that a court order in divorce that divides future monthly state pension benefits between spouses is not enforceable because Florida law does not allow it.
Generally, state, county and local government pensions in Florida are not subject to QDROs or other court orders of division between spouses, so the parties and judges must use other ways to equitably divide pension rights. Some methods that might be used:
- Increasing alimony payments or adjusting division or assignment of other assets to account for the value of future pension payments to the firefighter or police spouse
- Creating a trust account into which future pension payments would be deposited by the public pension administrator, with corresponding payments of a portion of the trust distributions going to the spouse who was not an officer or firefighter
Finally, state pensions also offer optional Deferred Retirement Option Plans or DROPS, which are accounts into which pension payments go if at retirement age, the firefighter or officer decides to keep receiving his or her regular salary. The other spouse may have marital property interest in a DROP that also must be accounted for in divorce negotiation or court ordered property division.
A related issue is the often-complicated question of accurate valuation of these pension interests. Many family lawyers work with experienced financial experts to help clients derive realistic present values of future pension interests.
Negotiation or court advocacy must be based on correct valuation to protect the financial interests of involved spouses.
It is important for firefighters and police officers and their spouses to each seek out legal counsel with extensive experience dividing public pensions in divorce, as the situations can be unique and complex.