Till Retirement Do Us Part: Pensions And Divorce
Determining the full value of a couple’s assets is not as simple as it might first appear. A host of questions about what belongs to whom and how it affects the final divorce financial settlement can keep attorneys and their clients up late at night. Law office management software can take on the burden of the calculations but often clients want to have some idea going in as to what assets will be divided. A common question is: Can my ex take part of my retirement?
The short answer is yes. Any increase in a pension’s value during the marriage can be portioned out to the spouse as part of the divorce financial settlement. However the actual value received and how it is paid out depends on a lot of factors, such as the type of pension.
In a defined contribution plan, such as a 401(k), the employee puts money into an account and that money can’t be withdrawn without incurring a penalty before the employee reaches a certain age. Dividing a defined contribution plan is simple. On the valuation date, the attorney enters the account balance into family law legal software programs to add it to the property value divided between the spouses. The valuation date selected is important since, as events over the last few years show, the value of investments can fluctuate wildly even over a few days.
Defined benefits plans, which are the more traditional pension plans, are a bit more complicated. Retirement benefits are based on values such as years worked rather than the amount of money invested in an account. Divorce attorneys may hire actuaries who specialize in pension calculations to determine the value of a plan, although legal software programs such as Easy Soft’s Divorce Financials can calculate a rough value to give clients an idea of how much money is involved.
After calculating the share of the pension the ex-spouse is entitled to, the next question is how it is paid out. It is possible for the ex to take a portion of the actual retirement payments, which might be the choice for older couple especially those who are already receiving pension benefits. Younger couples typically don’t want the issue to remain unresolved that long so the pension holder may choose to buy out the ex-spouse’s interest in the pension in a lump sum. Law office management software pension calculators can be used to evaluate both scenarios.
Pension calculation is just one of the many trickier aspects of divorce settlement handled by Easy Soft family law products. Take a look at Divorce Financials for most of your divorce case needs, but for your best legal software options don’t forget to consider our state-specific solutions for New York, New Jersey, Pennsylvania and Arizona child support calculation.