Equitable Distribution of a Pension Plan
Equitable Distribution of a Pension Plan Attorneys Ocean County and Monmouth NJ
Dividing your property in the middle of a divorce can cause partners to face strong differences when it comes to financial assets.
In previous blogs, we have discussed the concept of equitable division of marital property and premarital property and transfer of retirement accounts through the Qualified Domestic Relations Order (“QDRO”) without either party incurring a penalty. In the case of Donohue v. Donohue it was decided to divide up the husband’s pension with the divorcing wife. Specifically, Wife wanted the court to divide the pension according to the present valuation distribution method as opposed to the husband’s preference for the deferred distribution method. Here, the husband was a public employee and participated in a pension plan before the divorcing parties’ marriage and continued during their marriage for a total of 21.5 years.
The court as a preliminary matter reviewed the pension plan‘s earnings prior to the marriage and during the marriage and came up with the marital coverture period of 12 years and 2 months based on years of marriage and derived the marital coverture fraction of 59.56 %, in order to equitably allocate the wife’s portion from the husband’s pension plan. The coverture fraction has been defined in New Jersey as the percentage of years worked by the divorcing spouse during the marriage in comparison to the total years worked by the divorcing spouse. While this discussion was helpful and useful at the outset of the court’s decision had the court awarded wife the present value of the pension, the court disagreed with wife and found for the husband because he did not have the ability to pay the present value of the pension.
Valuation Distribution Method in New Jersey
The court considered the rulings in two previous cases in order to determine whether the present valuation distribution method was applicable. These cases instruct courts to review other assets that may be subject to an equitable division other than the pension plan if such are in existence in order to utilize the wife’s preferred method of distribution. However, since there were no such assets available, the distribution of the pension plan was deferred to the date of the husband’s retirement. The court also reviewed several factors to determine whether the wife was entitled to receive survivor benefits if the husband died after he retired. Given the length of the marriage and the husband’s plans to continue working for another 20 years, the court did not award wife survivor benefits but instead awarded her equitable share of the pension (through the submission of the QDRO) when the husband would start receiving pension benefits.
Helping Clients Navigate the Complexities of Asset Division and Pension Plans in Divorce Across in Brick and Sea Girt NJ
If you reside in Brick, New Jersey or in the surrounding communities, including Ocean County and Monmouth County and have questions regarding how your spouse’s pension should be divided or how your own pension plan will be subject to division in divorce please contact Family Law attorney Peter J. Bronzino at (732) 812-3102. Attorney Peter J. Bronzino will assess the financial circumstances of the parties and help you determine the equitable share of your spouse’s pension plan.