Generate Pension Report Create Account Log In How It Works Online Demo Sample Report Download Pension Form Print Pension Form QDRO Request Forms FREE Download Book Basics of Pensions In Depth Analysis Special Issues Actuarial Standards Sample Authorizations Pension FAQs QDRO FAQs Glossary Join Our Mailing List About Our Company About Our Analysts Contact Us Phone Consultations Our Fee Schedule Testimony Your Privacy Security Terms of Use Customer Support	Property Division Law After the court decides that retirement benefits meet the criteria to be considered property, the language of the state statutes must be examined to determine if such property is subject to division. State property division statutes can vary, but there are two general models. All Property Model According to the all property model, the court may divide any interest which meets the criteria to be considered property and is owned by one or both of the parties on the date of classification. Dual Property Model The dual property model provides that the court may divide only that property which is considered marital or community property. An asset can be considered marital or community property if it meets the criteria to be considered property, is owned by one or both parties on the date of classification, was acquired during the period of marriage, and does not specifically qualify as the separate property of either party. Comparison of the Two Models The first two requirements of these models are the same while the last two are unique to the dual classification model. Following is a discussion of the requirements. meets the criteria to be considered property; This is very important. Anything that cannot be considered property is not divisible upon divorce. is owned by one or both parties on the date of classification; This is typically not an obstacle when applying these requirements against retirement plans since it easy to determine, based on employer records, who owns the benefits. was acquired during the period of marriage; Something which qualifies as property will not always meet the criteria to be considered "marital property." The criteria to be considered "marital property" differs from state to state. However, the general consensus is that the property must have been acquired during the period of marriage in order to be considered "marital property." Typically, property acquired prior to the marriage or after the marriage has ended is considered separate property, not qualifying as "marital property." In order to determine whether a pension is marital or separate property, the period of time over which it was acquired must be determined. In general, Courts have decided that retirement benefits are a form of deferred compensation for past employment. Therefore, it is logical to conclude that such is earned over the course of the employee's years of service. In reconciling retirement benefits versus other property, the courts have held that similar to other property, a retirement benefit is acquired when its economic value is being created. The economic value of a retirement benefit is created during the period of time such benefits are being earned, not when they are being received. Therefore, if the employee is earning the right to receive retirement benefits for employment which took place during the period of marriage, such retirement benefits would be considered marital property. If the retirement benefits are earned relative to employment which took place either before or after the marriage, such benefits would be considered separate property. It should be noted that the point in time retirement benefits are received has no effect on determining whether or not they are considered marital property. The method for determining what portion of an employee's pension is to be considered marital property and which is separate property depends upon the type of plan. Under a defined contribution plan, the marital portion would be comprised of contributions made by the employee during the period of marriage and contributions made by the employer which are attributable to service performed during the marriage. The separate property component would be comprised of contributions made by the employee prior to or after the marriage or from private funds, and contributions made by the employer for service performed either before or after the period of marriage. In addition, any investment gains (or losses) should be applied proportionately against both the marital and separate property interests. Determining the marital property interest of a defined benefit plan can be a more complex issue. Since neither the employee nor the employer make regular equal contributions, it is not possible to use the same approach as is followed for a defined contribution plan. In determining the marital portion of a defined benefit plan, a Coverture Fraction has become a relied upon tool of the Court. This fraction compares the period of time the employee was married and earning retirement benefits to the total period of time the employee was employed and earning benefits. The formula is as follows: time employed during the marriage = coverture fraction total time employed     For example, if the employee worked for the same company for 20 years, 14 of which coincide with the period of marriage, 14/20 or 70% of his retirement benefits are marital property. As the example illustrates, the coverture fraction is used to determine only the marital share of the pension. The separate property interest would be 6/20 or 30%, where 6 is the number of years the employee was earning benefits outside of the period of marriage. does not specifically qualify as separate property of either party. In determining that portion of retirement benefits which were accumulated during the period of marriage, in many instances, the portion which were accumulated outside of the marriage becomes obvious. Very few states provide amnesty to specific retirement benefits in the property division arena. Therefore, in conducting an analysis of benefits to examine them against the above discussed criteria, qualification under this category will become obvious. Return to In Depth Analysis

	Our Pension Analysts Are Waiting...	Call Toll-Free 1-800-447-0084 Mon-Fri. 8am to 5pm EST.
Customer Support E-mail Form | Phone Toll-Free: 1-800-447-0084

© Copyright 2001-2009, All Rights Reserved, Pension Appraisers, Inc.
Comments & Suggestions? or Recommend This Page to a Friend!
Created, Maintained & Hosted by Divorcesource.com