Divorce Pension Settlement
Divorce Pension Settlement can only be achieved with valuation, appraisal and then distribution. Divorce Pension Settlements takes a qualified appraiser with experience in divorce pension settlement valuations. The amount allocated as a divorce pension figure can also be further altered by a Qualified Domestic Relations Order. The divorce pension figure decided upon for the non recipient is based upon a concrete figure that doesn’t change from year to year, despite the fact that the amount is adjusted for the recipient, based upon inflation. So while a defined benefit plan may be the most valuable asset in a marriage, often, the divorce retirement figure allocated to be paid as the divorce pension amount will be far below what the recipient will receive once eligible to receive their benefit.
How Divorce Pension Amounts are Calculated
There are two main ways that a divorce retirement figure is reached by an appraiser. The approach used will depend upon case and state law, and the facts of each individual situation. And while both have their uses, neither is a great tool when deciding upon a fair divorce retirement sum.
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- 1. Deferred vested pension appraisal – this approach only takes into account the benefit earned up to the marital property cut-off date. This approach often leads to a divorce pension figure far lower the actual value of the pension, and can make settlement far more difficult if the parties are aware that the divorce retirement sum is inequitable.
However, this approach does exist for a reason, and can be used in certain cases to reach a divorce pension settlement amount. If the recipient has lost the job, quit, or is likely to lose the job, then this is a suitable approach in allocating a divorce pension amount. It is also a fitting approach in reaching a divorce retirement sum if the recipient works in an industry where working breaks are normal and for a sustainable period (construction and entertainment industries are a good example). In these cases, it is difficult to conclude whether any further benefit will be accrued, so this approach is appropriate in determining a divorce pension figure.- 2. Matured full benefit pension appraisal – this approach assumes that the recipient will continue to work until their unreduced retirement date without any changes to their base salary from the marital cut-off date to the retirement date. The divorce pension amount is then derived by determining the full benefit amount and reducing it by a coverture calculation. This is usually a far fairer way of determining a divorce retirement sum.
Where the benefit amount is speculative, due to the industry (such as construction and entertainment industries), a Qualified Domestic Relations Order can be used when determining the divorce pension amount.
Appraisal witness usually is needed in divorce pension cases as litigation seems to prevail when retirement benefits are divvied up. DurkinValuation Associates are Expert Appraisal Witnesses who prepare every appraisal as if it will be challenged and need an appraisal witness to give irrefutable testimony in defense of the valuation. Call (617) 720-0332
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