In today’s blog we discuss the consideration of future pension benefits in the division of marital property in Missouri Family Courts.
In previous blogs, we have addressed the entitlement of divorcing spouses to retirement benefits accumulated during the marriage. In circumstances when the parties have accumulated, during the marriage, savings in a retirement savings plan such as a 401(k) Plan, 403(b) Plan, 457 Plan, Thrift Savings Plan, or IRA, the division of these assets is relatively simple. The present day value of the retirement asset can be verified through the most recent statement or by simply logging on to the account to check the balance. In determining the marital interest, the Court will consider the amount of that value that has accumulated during the marriage. That amount is generally marital property and will be considered in the division of assets in the overall marital estate.
However, in cases where a spouse has accumulated interest in a defined benefit pension plan the Court’s consideration of the value of that marital asset is not as simple. When a spouse accumulates an interest in a pension plan, the following three stages are to be considered in the accumulation of that asset: an interest in the pension plan that has not vested; an interest in the pension plan that has vested but has not matured to the point where the spouse is entitled to receive payment from the Plan; and the final stage, when a Plan is vested and has matured to the point where the spouse is entitled to receive the specific benefits defined in the Plan. In the final stage, the benefit is most often paid out in a specific monthly installments beginning when the employee/spouse reaches a certain age and/or has accumulated a specific amount of years of service time.
It is the second stage, when the Plan has vested but not fully matured, that the Court may struggle with assigning a value to the marital asset and struggle with the manner in which that asset may be divided in certain circumstances.
In a recent decision from the Southern District Missouri Court of Appeals, the Court found that the Family Court Judge who hears the case has broad discretion and flexibility in both determining its marital value and in determining the manner in which the non-employee spouse will receive her interest in that Plan and does not have to follow the specific request of husband or wife in dividing the plan. In that case, both husband and wife asked the Court to determine a present day dollar value of the future payments from Father’s interest in his LAGERS pension plan and to use that value in considering how to divide all assets in the marital estate. However, husband and wife differed greatly in the present day value they requested the Court to assign to his Missouri LAGERS plan.
In that case, the Missouri Court of Appeals upheld the Judge’s decision to reject the request of both husband and wife to determine a present day value of the pension plan and to divide the marital assets in consideration of that present day value. The Court sustained the Family Court’s decision to order the husband to pay his wife, upon his future receipt of his monthly pension benefit, in an amount equal to her marital interest in the Plan. Despite the requests of husband and wife to do so, the present day value of the plan was not considered by the Court in the division of the marital estate.
Based upon your Family Court’s Judge’s broad discretion and flexibility to divide a marital interest in future payments from a pension plan it is important that you have a good understanding of how your family court judge is likely to view the circumstances of your entitlement to future benefits. This knowledge is critical and will assist you in adequately planning for your financial future for your life after your divorce is finalized.
If you are faced with the challenge of navigating our Missouri Family Court and specifically dividing a marital interest in a defined benefit pension plan, please feel free to contact our office today for a free consultation to discuss the specifics of your situation.