Divorce and Dividing Social Security Benefits

Dividing pensions and retirement plans can be a very complicated aspect of divorce. The rules that apply to social security benefits do not make things any less complicated.

Pension and retirement plans acquired during the marriage are community property just like any other community property. Pensions and retirement plans usually need to be divided through the use of a Qualified Domestic Relations Order (called a QDRO) or Domestic Relations Order (called a DRO). What about social security benefits? How are those divided?

Here’s the rub: they cannot be divided. Social security benefits are the separate property of the spouse who receives them. The Courts cannot even divide the remaining community property in a way to offset potentially inequitable results that result from this rule.

These potentially inequitable results were very real in the Marriage of Peterson case that was issued recently by the Court of Appeals.

In this case, the Husband had been paying into the social security system during the entirety of the marriage. There was no dispute that community money was being used to pay into the social security system. Similarly, the Wife had been paying into the Los Angeles County Employees Retirement Association (LACERA). As is standard with public employees who contribute to a pension, Wife did not contribute to social security. In any event, under the Windfall Elimination Provision and Government Pension Offset portions of the Social Security Act, the Wife was barred from receiving social security benefits, both individually and as a spouse. The trial court ruled that the social security benefits belonged entirely to the Husband and that the LACERA plan had to be divided equally. Wife appealed, complaining that this was fundamentally unfair.

The Court of Appeals acknowledged that by only dividing the LACERA plan and allowing husband to keep all of his social security benefits, an unfair result followed. But they acknowledged that was the state of the law and that federal law, particularly the Hisquierdo United States Supreme Court case, was clear on the subject: Social Security Benefits are not only the separate property of the spouse who receives them, but the states cannot offset any inequities that result from being unable to divide social security benefits.

Complex Issues – Required Financial Disclosures in Divorce

It should be noted, however, that although the Court’s hands are tied when it comes to the division of property, this does not mean that the Court can’t consider social security income in awarding spousal or child support. In the Peterson case, Husband would undoubtedly end up in a better financial position once the parties retire. He would be keeping 100% of his social security benefits, while the parties would be splitting equally the LACERA plan. In this case, if Husband is earning more than Wife due to his social security benefits, nothing prevents the Court from awarding spousal or child support based on this difference in income.

If you are considering a divorce from your spouse, a legal separation, have already begun the process, or if you simply have questions regarding what will happen to your retirement upon divorce, please contact us. When situations like these arise, it is important to be represented by competent and experienced legal counsel who will ensure that your rights are protected. Nancy J. Bickford is the only Certified Family Law Specialist (CFLS) in San Diego County who is also a licensed Certified Public Accountant (CPA) with a Master of Business Administration (MBA). Don’t settle for less when determining your rights. Call 858-793-8884 in Del Mar, Carmel Valley, North County or San Diego.


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