Pension Valuation During Divorce
Calculating the value of tomorrow’s benefits today
For most divorcing couples, the addition of retirement benefits into the financial conversation can make matters murky when devising options for property division.
If pension benefits are in the mix, it is often difficult to ensure these benefits are accurately considered in a fair and equitable distribution without a present value calculation.
And that’s the problem for most divorcing couples: Finding the present-day value of pension benefits is a complicated ordeal (not for the faint of heart, I assure you.)
So, how do we find the present value of pension benefits during divorce?
Unless you’re working for a massive corporation, the everyday pension administrator won’t be able to give you an indicator of the present day value of your pension benefits. That’s no help when you want to factor these benefits into your property division.
As a divorce CPA, I’ve worked with couples and divorce professionals to navigate the tricky endeavor of putting a present day value to pension benefits.
Once I have the present day value of these pension benefits, then what?
My ability to precisely calculate the present day value of pension benefits during divorce is particularly helpful when determining ways of offsetting the asset for the non-participating spouse (that is to say, the spouse who doesn’t currently hold the pension benefits.)
This is particularly helpful when deciding the safest investments to make to provide for an income stream of equal value to the present day value of the pension benefits. (So, we’re finding out today’s value for pension benefits to make investments to deliver this same amount down the road.)