Thursday, August 13, 2009
Valuing a Washington Pension in Divorce Using an Actuary
Pension and other retirement benefits are generally considered property subject to distribution by the Court in a dissolution action. A pension plan can be divided in two primary methods. The first is to determine it's value and awarding it to one spouse. The second is to divide the benefit between the spouses, typically using a Qualified Domestic Relations Order (QDRO). Today, we will look at the first option.
The first method in awarding a pension, is to find the present value of the future stream of benefits, and then giving the benefit in its entirety to the spouse. The pension fund will typically give us the amount of the monthly benefit at retirement (usually age 65), but will not tell us what that is worth in today's dollars. To value the pension, we send the information (payment amount, date of birth, expected date of retirement, date of employment, date of marriage, and pension information) to an actuary, who uses life expectancy tables and projected interest rates to determine its present value in today's dollars. This benefit can then be awarded in its entirety to one spouse. In this case, to have a fair and equitable division of assets, the other spouse would probably be awarded other assets to offset this value (possibly their own pension, the house, or something else).
In the next entry, I will address the second method, of actually dividing the pension between the two spouses, so they both receive payments at the time of retirement.
A family law attorney can advise you on how retirement benefits can fit into a fair division of assets, and help in getting them valued. QDRO's need to be approved by both the court and the pension administrator. Be sure to have your QDRO reviewed by an attorney.
The Renton law firm of Mogren, Glessner & Roti, represents clients in a variety of family law cases, including the division of assets (like a pension) in a divorce. We have 4 attorneys for you to chose from. Please visit our web page at http://www.mgrlaw.com/ for more information.