The Division of a Pension Plan Under Wisconsin State Law
Wisconsin is a community property state; thus, all property belonging to either member of a marriage belongs equally to both members of the marriage, including pension plans. If the couple divorces, the divorce court must therefore determine how to divide present and future pension plan dividends between the soon-to-be former spouses.
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Retirement Earnings
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If either spouse opened a retirement plan during the course of the marriage, Wisconsin law views the retirement plan as belonging to both spouses. Thus, ex-spouses are entitled to withdrawals from the retirement plan based on contributions a spouse made during the course of the marriage but are not entitled to withdrawals of contributions made after the marriage ends. The court usually decrees that a former spouse is entitled to a percentage of the other spouse's retirement benefits when he reaches retirement age. The court compares the contributions made during the marriage to the expected contributions the spouse will make during his lifetime to determine the percentage the former spouse is entitled to.
Qualified Domestic Relations Order
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Wisconsin divorce courts order the spouses to divide a pension plan using a document called a Qualified Domestic Relations Order. A spouse must give a copy of this order to his plan administrator before the administrator can divide the retirement plan between the two spouses.
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Benefits Prior to Marriage
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Although in most states retirement contributions before marriage would not qualify for division, Wisconsin does not exempt these benefits when dividing pension plans; it only exempts benefits that the spouse incurs after the divorce is finalized. Thus, when the divorce court divides the pension plan, it divides the amount of benefits the spouse has earned as of the date of the divorce rather than the amount of benefits the spouse earned within the marriage.
Spendthrift Clauses
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Some Wisconsin state pensions have spendthrift clauses prohibiting the beneficiaries of the pension from directly accessing funds. However, in most cases these clauses are not relevant to dividing pension plans during a divorce. Although one spouse cannot withdraw money from his pension fund and give it directly to the other if there is a spendthrift clause on the pension, the courts may order the plan provider to distribute a portion of funds to a former spouse during a divorce.
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