The Blanch Law Firm meets the matrimonial law needs of High Net Worth Clients through expert appraisal of retirement, pension and disability benefits, with legal advice on distribution of these assets subsequent to a legal separation or contested divorce.

Our seasoned and thorough Divorce Lawyers have extensive experience in matrimonial proceedings, which are notorious for sophisticated discovery and motion practice where financials are the major issue. And if the matter goes to trial, our attorneys’ masterful courtroom skills can be depended on to achieve the best possible result for our clients.

Immediate Offset of Pension, Disability or Retirement Benefits

The two methods of distributing pension, disability, and/or retirement benefits in divorce are: the “immediate offset method” and the “deferred distribution method.” The basic difference is when the division of benefits occurs. According to the immediate offset method, a court determines the present value of the benefits, and awards a lump sum in cash or other property. In other words, the recipient spouse obtains an interest in other property owned by the couple to offset the interest in the holder’s (or payor’s) benefits. Accordingly, the payor does not forfeit any ownership rights in the pension, disability, or retirement plan. However, under this method, division of benefits does not occur at once. Instead, the court determines the specific dollar amount to be awarded, ordering that the recipient spouse be paid this amount when the benefits mature and funds are made available. Accordingly, because the payor is ineligible to receive benefits until a future time, distribution of those benefits is deferred.

The strength of this method is full resolution at the time of the divorce of the benefits division issue, thereby eliminating the possibility of future litigation. But a drawback to the immediate offset method is that the court cannot base its decision on fact but must instead speculate, because the court can only determine the present value of benefits, not their actual value. Present value is determined through actuarial tables according to the policy holder’s projected life span (based on an average life span not on the interested party’s actual one). Consequently, the holder, who must trade current dollars for a yield of future dollars that may never be realized, faces a greater risk than the recipient spouse.

Deferred Distribution of Pension, Disability, or Retirement Income

According to the deferred distribution method, a court orders that benefits are to be paid as they are received. Thus, because payment of benefits is not based on an actuarial table (i.e. what happens in the average case), there is no risk of one spouse being shortchanged or of the other receiving a windfall. Consequently, both spouses share equally in all risks associated with actual payout of benefits. This method also requires each spouse to pay an equivalent tax on benefits received. Because under this method, checks are sent to both spouses simultaneously, each of them is responsible for paying their fair shore of income tax on the benefits that each of them receives. (The immediate offset method does not always result in the same income tax liabilities for both spouses).

But a weakness in the deferred distribution method is that because payments are not allocated until a future date, there is no final division of benefits at divorce. Therefore, the spouses are not entirely free of one another, in that they must maintain a financial relationship. More importantly, the recipient is dependent on the holder surviving so that benefits will continue to accrue until payout. The untimely death of the holder (or payor) jeopardizes or eliminates the recipient’s rights to benefits. But the greatest drawback to this method is the difficulty in assessing the precise amount of pension, disability, or retirement benefits to which the holder shall be entitled. This is because such plans offer a range of options to choose from, each of which provides different financial benefits. Thus, subsequent to divorce (sometimes many years later), the holder (or payor) has the right to choose an option that may have an adverse effect on the recipient spouse’s financial position.

The best method for distributing pension, disability and/or retirement benefits is among the most difficult problems to be faced in a divorce.

Aggressive Divorce Lawyers

The Blanch Law Firm provides expert appraisal of pension, disability, and retirement benefits, including assessment of different distribution methods for them. While disputes over this type of financial asset are usually contentious, they also often end in “settlement agreements,” to which both parties commit without requiring a judge’s intervention. Our seasoned divorce attorneys are experienced in predicting the full range of options and can put in place an agreement that is not only favorable to the client but also satisfactory to the court.

To arrange an initial consultation, Contact The Blanch Law Firm by calling (877) DIV-ATTY.