By Donald A. Hayes, Esq. Attorney at Law
The divorce court has a duty under Family Code §2550 to divide the assets and debts of the parties in an equitable manner. As a general rule, the trial court is vested with discretion in selecting a method to effect distribution of the community interest in pension or retirement plans. The court may divide the pension awarding the non-employee spouse a community interest to be paid at the time the employee spouse retires; or it may order the plan to be valued by an actuarial expert to determine its present which often can be quite a large amount. Which method is adopted will vary with the facts in each case and the matter is left to the sound discretion of the court to apply which method which would reach a reasonable result.
Sometimes it is beneficial to request the court to determine the non-employee spouse’s interest in the pension plan before retirement, especially if it will take many years for the employee to reach retirement age. This can prove to be an effective way to leverage a buyout of some other community asset the non-employee spouse is interested in, such as a family residence or a business. This is especially true when there is little or no cash available to finance a buy-out of an asset; or where a refinance is simply not possible. In such cases the actuarial expert will determine the present value of the pension plan and the non-employee’s community share. When that figure is determined it can be used to satisfy the buyout amount owed to the other spouse for their interest in a house, a business, or some other asset. The divorce lawyers Spokane can help you out with this.
The present value calculations performed by an actuary are not expensive usually costing around $750. It is suggested that the parties first attempt to reach an agreement on the concept of valuing the pension to leverage a buyout. If no agreement can be reached then it will be necessary to present unique facts or circumstances to the court to persuade it to order the pension to be valued now rather than to wait many years to obtain any benefits.