Child Custody And Divorce: Free Legal Advice
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This question comes up now and again, but most people have accepted that the law has changed over the last twenty years or so, and recognize that the proposition is true: a pension, or annuity, or 401k plan, or other benefit from an employer, is an asset of the marriage.
The simple way to look at it is this: it is a financial benefit, that certainly has value, that was accumulated during the marriage.
Example: Husband and Wife get married in 1976, and that same month, he goes to work for a large company, say, GM or Ford. Over the next twenty years, she raises babies, and doesn't work. He works, but for the most part, doesn't raise babies (Don't start with that email, guys. Yes, he's a fine dad, etc. It's an EXAMPLE. He was employed, she wasn't, ok?), and, now, he's got a pension, and she doesn't.
The pension is vested, which is to say that he has some money coming EVEN IF HE QUITS. It's his, period. He's not yet to full retirement, that comes several years from now. But if he does quit, today, he has some money coming in the future. Let's look at the various figures that apply:
1. If Husband quits today, his employer (or pension administrator for the employer) will give him a significantly reduced (as opposed to a full retirement) benefit, of $170 per month, starting at age 65, and lasting until he dies.
2. If Husband continues to work there, and stays the whole twenty five or thirty years, he will get a full retirement, which is to say approximately $2000 per month, starting at age 65, and lasting until he dies.
It is the first, not the second, paragraph that is going to be divided by the judge. Why? Because the judge is dividing the property that these parties have TODAY, not what they might (or surely will) have in the future. TODAY, husband has a right to that $170 a month. He must stay, (and stay, and stay, and stay...) into the future to get the bigger amount, and he'll be doing that part without his present spouse, she'll be making no contribution, as they divorced back in 1996. So that's the future, and it's speculative. Not very (most guys don't walk away from the pension when they get to this point), but still speculative, and it doesn't exist TODAY. So the big figure is not marital property.
The smaller figure IS marital property, however, because it does exist today. And since it was acquired by these parties, either both of them, or any one of them, during the marriage, it's marital property. It's not his SEPARATE property any more. You are surely wasting your time in trying to argue that the pension is separate property. The appeals courts have already ruled on that point, and the law is settled: the pension, as it exists TODAY, is marital property, and is going to be divided.
Several issues exist here, and you need to be aware of them:
1. How are we going to divide that pension interest that DOES exist, without interfering with that pension interest that is in the future?
2. How do we determine what the present interest is, or, to ask it a different way, how do we determine just what the present interest is worth?
3. If it matters (and it MATTERS. It really does) what date do we use for "today"?
4. If it matters (and it MAY. It just might), what share of the presently existing benefit is marital property?
Let's take the first one first. The division can be done in just about any creative way, so stay flexible throughout this process. This is what you are paying your lawyer for: professional expertise in a complicated, strange, and difficult area that you may know nothing about, with terms and words that can be confusing. There are, however, two principal ways of dividing the pension:
a. Husband buys the wife out of her share, by paying her for it, either in cash or over time (presumably with interest), or
b. The pension is made subject to a court order which directs the pension administrator to divide the pension, in an appropriate manner, when the pension administrator starts paying the money out.
Under paragraph "a", the parties are going to have the pension valued, by a suitable professional: it might be a Certified Public Accountant, it might be an actuary, it might be a firm that specializes in valuing pensions. But some professional needs to value the "today" portion of the pension, if there is going to be a buy-out. (You really need to do this early, so that you can use it in negotitations to settle.) That firm will issue a report that says "the present value of the Husband's pension is worth $18,600". That means that half of that marital asset, or $9,300, would go to each party. It may be that Husband writes a check, it may be that husband trades a different marital asset, such as the house. But after you get that report, you know what it's worth. Typically, if there is twenty thousand of net house equity, and wife is keeping the house, Husband would have ten thousand coming, wouldn't he? If the pension were valued at the figure above, why not let Wife keep the entire house, and husband keep the entire pension? The math works out, doesn't it? But you have to do the professional evaluation, because you need an ACCURATE figure to use, don't you?
The other issues are discussed in the next chapter Advanced Pension Issues