That looks like some scary math that you were supposed to learn in high school, doesn’t it? Determining the value of a defined benefit plan is extremely important in family law because it represents the true value in today’s dollars of the future benefit payments that begin at a specific future retirement date (the Present Value). Those payments typically continue until the death of the participant spouse. Many people are pleasantly surprised to learn that the present value of their or their spouse’s defined benefit plan is very substantial and much, much higher than the cash or surrender value.
Many defined benefit plans end up being divided between divorcing partners through a special type of court order called a Qualified Domestic Relations Order (QDRO). If the marital portion of the defined benefit is being divided using a QDRO, you do not need to determine the present value of the plan.
However, if a plan in your marriage was earned at least partially during your marriage, and you want to see if you can trade some or all of another asset, such as a 401k plan or home equity, for the share of the defined benefit plan that is yours, you need to determine the value of the marital portion of the defined benefit plan. This comes up frequently when each partner is a participant in a defined benefit plan. Will it be fair or equal to just say each partner keeps their own plan? Maybe, maybe not. You need to find out.
You’re in luck. Zoller|Biacsi lawyers have access to a powerful and quick tool to determine not only the total present value, but the marital portion of the present value of defined benefit plans.
Family Law Software calculates present values of defined benefit plans quickly and easily.
Your Zoller|Biacsi attorney will need some information in addition to what you see above. He or she will need to know the start date of participation in the plan (not always the first day of employment), the date of the marriage, the date to end the accrual of an interest in the plan (typically the date of divorce) and the regular date of retirement. Presto, now you know what the plan is worth and how much of it was earned during the marriage.
To learn more about how best to value a defined benefit plan, consult a member of Zoller|Biacsi today.
John D. Zoller JD, CDFA
Ohio representative: 216-241-2200
Michigan representative: 231-412-7562