I currently have two post-judgment divorce cases dealing with the same issue: equitable distribution of a pension, which was agreed to by the parties over ten years ago when they were divorced. The problem in both cases has to do with the amount the ex-spouse (in these cases, the ex-wife) is entitled to when the ex-husband retires.
In many divorce cases in which a retirement plan is an asset subject to equitable distribution, the parties agree that the participant spouse shall assign to the non-participant spouse, or alternate payee, a percentage of the monthly retirement benefit that he receives when the pension goes into pay status. This is accomplished by a Qualified Domestic Relations Order (QDRO) signed by the judge and sent to the employee's company.
In the first case I am dealing with, a QDRO was entered and sent to the husband's employer, however, the employer lost it. The ex-husband retired over five years ago and the ex-wife just found out. She sent another copy to the employer, who has begun making monthly payments, however, the ex-husband disagrees that she is entitled to the amount she is being paid and has thus far refused to pay her the arrearages.
In the second case, the parties have never been able to agree on the form of the QDRO and no QDRO has been entered. The ex-husband retired and began receiving benefits and the ex-wife has not been able to receive her share.
In both of these cases, the ex-husband is relying on a pension evaluation that was done at the time of the divorce. Pension evaluations are performed in the event the participant wishes to buy-out the alternate payee's share of the pension with another asset. The evaluation is based on assumed interest rates, mortality rates, date of retirement and future compensation. This figure is then discounted to present day dollars.
Although pension evaluations were performed in both cases, neither participant purchased the wife's share of his pension, and instead agreed to give her a percentage upon retirement. Yet, they are both now arguing that she is only entitled to her percentage as of the date of the divorce.
New Jersey case law is clear that a present value evaluation performed at the time of divorce is irrelevant if the alternate payee waits for a deferred distribution which will occur when the participant retires.
New Jersey's Appellate Division has addressed this issue in the past.
"As it would be unjust to require the pensioner to pay a full share of a future entitlement at the time of the divorce without discount, so it would be unthinkable to require the pensioner's spouse to defer receipt of an equitable share of the pension until a future date but reduce that entitlement to its value as of the time of the divorce. Simply put, future benefits should not be paid in present dollars without a discount and present benefits should not be discounted to the value of past dollars." Whitfield v. Whitfield, 222 N.J. Super. 36, 51-52 (App. Div. 1987). See also, Risoldi v. Risoldi, 320 N.J. Super. 524 (App. Div. 1999).
Technorati Tags: New Jersey : Divorce : QDRO
