Vikki on Splitting the Pension
Are both parties entitled to a pension if only one party works for it? Vikki explains.
Many people work very hard to obtain pension benefits so that they can retire and have the ability to support themselves after they stop working. Most retirement benefits that accrue after a party marries is generally subject to distribution. There are many factors on how the retirement asset gets divided, how long the parties were married and if they live in a community property state or an equitable distribution one. Suffice it to say, if a couple is married for a long period of time the other spouse will likely obtain 50-percent of the marital portion by way of a lump sum, buy out or payout over time upon the payor's retirement status.
There are complicating factors as to how a pension is valued and we usually leave that to actuaries to tell attorneys what the pension is worth and try to avoid tax consequences of the rollover to the non-retired spouse. However, in certain instances like the episode between Tim and Kelly, Tim wanted to keep his entire pension and was willing to give up his 50-percent share in the marital residence. Even though half of Tim's equity was not per se taxable and Kelly's 50-percent of the pension is, the figures were almost exactly the same which made it a wash for each to keep the entire asset without a credit to either of them, which was very lucky!
This happens in many cases when one party wants one asset badly and the other wants another asset. The problem becomes when both parties want the same asset! Fortunately in this episode, I was able to make both Tim and Kelly happy by giving them the asset that they did not want to part with. The glitch was the survivor benefit that attached during the marriage to Kelly if Tim were to predecease her. Usually, if Tim was keeping the pension he would not need to keep Kelly as the survivor benefit but based on the history of their marriage and the fact that he felt bad for the pain he caused her he was willing to keep her on post-divorce. This was very unique but a testament to Tim’s ability to recognize his mistakes and take charge of trying to rectify them. He is a firefighter and is in a very dangerous line of work. If something were to happen to Tim, Kelly would receive the survivor benefit attached to Tim's pension. Let’s hope that both parties remain healthy so this never is triggered. However, it was an issue that we had to deal with in the mediation that was able to be cured through cooperation and compromise.