(May 15 – 09:35 ET) – An Ottawa lawyer says divorcing spouses need to protect pension equalizations.
Stanley Kershman of Kershman & Associate says an April 14 court decision means that declaring bankruptcy no longer means that divorce-related pension judgements can be reduced or even eliminated.
“Traditionally, if someone who was ordered to pay pension equalization amounts declared bankruptcy, the equalization was considered part of their estate,” Kershman says. “This means that the bankruptcy process could decrease or even stop those payments. A former spouse who may be counting on receiving that money could face real financial hardship when this happens.”
However, he also notes that if the judge ordering the pension equalization payments impresses them with a trust, the debt will survive the bankruptcy. “If you’re involved in separation or divorce proceedings that include equalization of pensions, it’s essential to protect yourself by requesting that the judge impress those payments with a trust,” explains Kershman.
-IE Staff