Child Custody And Divorce: Free Legal Advice
Child Custody And Divorce: Free Legal Advice
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The significant fact about pension benefits is that they are an item that is "back loaded" as opposed to "front loaded". An example of something front loaded is your typical mutual fund investment: you invest $5000, and the first thing that comes out of it is your fees: $1200. Congratulations, your $5000 investment on Monday is worth $3800 on Tuesday, and we here at the company sure do hope it will grow, yessir, but of course no guarantee of future performance can be made, etc, etc,. Note that the fees came out in FRONT.
Pensions are just the reverse. The first few years of a pension are worthless, and the last few years is where the real growth in the benefit takes place. Think about it from the employer's point of view: he has to provide an average of fifty thousand, say, to provide a pension benefit to persons who retire at 65 years old, and who are expected to live another fourteen to twenty years from that date. Is he going to provide two thousand dollars per year for each of twenty five years? No. That would mean that if someone stayed for only a year, that person would take their pension contribution with them for the last year, namely that two thousand dollars? No indeedy do.
So the powers that be (don't ask me who they are, there are money guys that are very, very smart) designed some standard pension rules, and those rules favor the person who stays the longest. Perhaps they should, when you think about it. To get the greatest possible benefit, you have to stay to full retirement, obviously. But the benefit you gain in that twenty fourth (staying over from the twenty third) year is FAR GREATER than what you gain from the thirteenth (staying over from the twelfth) year. It is usually able to be computed monthly, as opposed to just one figure for the year. That's why I say the pension is "back loaded". The farther you get into it, the more that each month is worth.
What does this mean to you? It creates an issue that is very, very important. When this pension benefit gets evaluated, the actuary or C.P.A. will need to know (by letter) "What does this person get if he quits or retires TODAY?" That benefit is then computed based upon the number of years to retirement, and the life expectancy of the person after he retires. If you want to know the outlines of the math, just how a value is put on this pension, click here. It's kind of dry stuff, so I'll skip it here. It's enough to say that of four or five possible dates, the monthly benefit can change drastically, in the later years just prior to retirement. (REPEAT: in the later years, just prior to retirement). Therefore, if Wife is going to be awarded a share of the Husband's pension, she wants the latest possible date to be used when computing the value. If the date of the separation of the parties is January 1, and the date of filing the complaint is April 1, and the first time she hears about this stuff and writes the letter is August 1, and the case is scheduled to go to trial December 1, what date does she want that pension valued at? Why, as of DECEMBER FIRST, of course: the monthly benefit to be received if he left "today" will be significantly higher than January 1, and higher than either of the other two dates, won't it? And, of course, a higher monthly benefit to be received means a higher actual cash value for that benefit, doesn't it? Talk to your lawyer about this. Of course, the Husband wants the earliest possible date to be used for "today", because the monthly benefit is smaller, to be sure.
The presently existing monthly benefit may also be part marital and part non-marital. Example:
1. Husband hires in at Ford in 1970.
2. Husband marries Wife in 1980.
3. They are divorced in 1990.
In this case, wife could expect to get one-fourth of the pension's current value in 1990. Why? Because the first half of the pension is all his (1970-1980. Ten years). He wasn't married yet. The second half (1980-1990. Ten years) is marital property, and Wife would get half of the second half, or one-quarter of the total. That part, at least, is fairly easy to understand.
What if the Husband can't afford to buy Wife out? What if he doesn't care to? Or Wife doesn't want that option? The court can enter an order, usually called a QUALIFIED DOMESTIC RELATIONS ORDER (and abbreviated QDRO, and called a "quad-ro") which directs that the pension administrator do the dividing, and mail each party their appropriate portion. In the example fifteen lines above this one, the order might say "Mail to Husband 3/4 of the pension benefit, and mail to Wife 1/4 of the pension benefit, each time you write a check." That scenario of course ASSUMES that the husband was actually going to retire in 1990, doesn't it? You and your attorney can go over the language that is required in your specific case, if a QDRO is to be used. The point is, it's an option available to you, and you need a professional to get it properly done.
Good luck with it.