How Do I Divide A Pension In A Divorce?
Equitable distribution is simple when everything is cash and liquid. Unfortunately many assets are not. One of the challenging problems in a property settlement is the retirement fund, but Divorce Financials divorce settlement software can help with that.
401k Vs. Pension
A defined contribution plan such as a 401k or an IRA is fairly easy to distribute. You can simply calculate the growth of the fund through contributions and dividends over the course of the marriage, and then decide what percentage of that should go to the spouse. It’s not really any different than dividing a savings account. Of course the account holder isn’t likely to cash in the account to make the payment, so some liquid asset or non-liquid asset of equivalent value will be substituted.
Defined benefit plans, known more commonly as pensions, are a more complicated case. Pensions are fairly rare nowadays, since companies don’t want the responsibility of managing pension funds for decades after an employee retires, but they can still be found. Since there is no account balance to divide up, how can you determine what the spouse is owed?
Pensions are trickier to figure since the pension member will be paid a defined amount, based on factors such as salary and years worked, every month from retirement until death. Technically you could just have the spouse receive a portion of that monthly payment but that is both a hardship to the pension holder, who will already be living on a fixed income, and inconvenient for the spouse, since it’s better to handle the property division immediately and get it over with.
Divorce Financials family attorney software has a built-in pension calculator that makes pension valuation easy — or at least less difficult than trying to do it without a computer. Enter some basic information such as the monthly contribution, the planned retirement age and the dates of marriage and divorce. Add a few assumptions about interest and life expectancy, and voila you have a rough estimate of the pension’s value.
Easy Soft’s Divorce Financials software streamlines almost every aspect of divorce settlement, alimony and child support calculation. Present stronger settlement offers by backing them up with hard figures and accurate analyses. Get your client the settlement that is deserved, while spending a fraction of the time you’d spend if you used outdated manual methods.
Contact us to find out more about how Divorce Financials and our other attorney software packages can simplify your practice and boost your firm’s profits.