Pensions can be a difficult entity to address in divorces. They can be (1) a current stream of income, (2) a future stream of income, (3) a marital asset or (4) a nonmarital asset or some combination of the four. Though the Minnesota Supreme Court addresses only one or two family court cases each year, this issue did get the Court's attention this year. In the Lee case, the husband had earned pension benefits before, during, and after the marriage. The portion of the pension earned during the marriage could be divided.

The wife received spousal maintenance. When the husband sought to terminate or eliminate maintenance, the legal wrangling began. Ultimately, the Minnesota Supreme Court decided that pension benefits earned during a marriage (and divided in the divorce as happened here) are not available for consideration as income for the purpose of determining maintenance. Income from pension benefits earned before and after the marriage is available.

The general rule to be learned from this case is that a marital portion of a pension can be property. A nonmarital (both pre- and post-marriage) portion can be income; but it cannot be both. Certainly, there may be exceptions in very unusual cases, but this clarifies the general principle.

Note: this does not apply well to other types of retirement assets like a 401(k) or IRA since they do not have the same cash flow considerations.