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Author: BarbieG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75859  
Subject: PENSION SURVIVORSHIP Date: 9/24/1999 5:01 PM
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Hi....Let me explain briefly. My husband of 36 years is divorcing me. Go figure! Anyway I'm disabled and receiving SSDI. I can no longer work. As we approach our final "agreements" in heading for divorce court I find that he has listed me as only receiving 50% of his pension should I survive him. Is this usual? It's a Defined Benefit Plan plus a SERP. However my daughter was just asking me why I wouldn't be eligible to receive 100% of it should I survive him? Does anybody understand these things and can you offer any advice? At least for what I should be looking for and the questions to ask. Yes, we're attempting to do this agreement ourselves to save attorney fees. But I need to understand more. Please advise. THANKS
Barbie
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Author: Bobbcat Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14041 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/24/1999 6:22 PM
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For a Defined Benefit Plan that is normal, even if you were not divorced but a surviving spouse. You didn't indicate if he's getting remarried (ouch). Protect yourself against that possibility.

Are you going to receive 50% of the payment that he gets while living (even as alimony)? If so, this will guarantee that you will still get the same amount.

Unlike a defined contribution plan, like a 401(k), there is no set balance for payments. Once the two of you are deceased there will be no more payments to anyone. However, if you live to age 93, you will have beat the life expectancy tables and this is a great deal.

If you have a question, call someone in HR at your soon-to-be ex-husband's employer. They should be able to help. They'll also want to know that his balance may be subject to a pending QDRO.

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Author: BarbieG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14043 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/24/1999 8:21 PM
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Bobbcat.......Thanks for you help! As I understand it I will receive 30% of his pension while he is still living. Once deceased I will receive 50% of it. Does that make sense to you? Re: him getting remarried. That's an unknown at this point but I certainly do look for that to happen in the future. So naturally I'm concerned that I protect myself regarding the alimony AND pension. You referred to receiving the 50% while he is living. Please explain further for me? Thanks again!
Barbie

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Author: jocave One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14045 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/24/1999 10:45 PM
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Defined benefit plans often have two payout choices:
1) A larger benefit over the life of the recipient with a reduced benefit (50%, 67%, etc.) over the life of the surviving spouse.
2) A smaller benefit over the life of the recipient or surviving spouse.

You should check to see whether your husband's plan has one or both of these options.

I take from your followup message (14043) that the current plan is that you'll get 30% of his pension payments while he's alive and 50% after he's deceased.
That would seem to indicate that he'll be recieving his pension via payout choice #1 above and that he'll be giving you 30% of what he receives.

Assuming all this is correct-

While this seems reasonable, I'd think 30% a somewhat low figure for someone on SSDI after 36 years.
I'd check to see whether he'll have a choice of payout options and run the numbers both ways.

Make sure that you get whatever official paperwork you need to enforce the agreement with the pension fund. If he remarries, I'd be concerned that the pension company would be obligated to send the survivor payments to his new wife. Legal minds around here may be able to expound on what would be necessary.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14048 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/25/1999 10:18 AM
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Greetings, Barbie, and welcome. You wrote:

<< My husband of 36 years is divorcing me. Go figure! Anyway I'm disabled and receiving SSDI. I can no longer work. As we approach our final "agreements" in heading for divorce court I find that he has listed me as only receiving 50% of his pension should I survive him. Is this usual? It's a Defined Benefit Plan plus a SERP. However my daughter was just asking me why I wouldn't be eligible to receive 100% of it should I survive him? Does anybody understand these things and can you offer any advice? At least for what I should be looking for and the questions to ask. Yes, we're attempting to do this agreement ourselves to save attorney fees. But I need to understand more. >>

As others have pointed out, a 50% survivor's annuity to you from a defined benefit plan is a typical arrangement. It means you will get half of what your soon-to-be-ex would draw from the plan during his life. Some plans allow a higher survivor's annuity if such an election is chosen at the time of retirement. During the retiree's life, the amount he gets is less, but on his death the survivor gets a higher percentage (up to 100%) of that smaller amount. How much you will get is contingent on the election he makes at retirement.

I recognize you wish to avoid attorney's fees and keep the divorce friendly. Still, I think there's a large chance you may inadvertantly make a mistake regarding what you should get from that pension while he is still living. I, too, think 30% is too small given the length of the marriage. Also, I would want to ensure a properly drawn Qualified Domestic Relations Order was issued by the court and filed with the plan administrator to protect both what you receive during his life and what you get after he is deceased. That's the only thing that will provide a guaranteed protection of your interests, and the creation of that document will require the services of a lawyer.

Don't mess around here or you may live to regret it in your old age.

Regards..Pixy

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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14050 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/25/1999 12:27 PM
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The 50% survivorship election is typical; however, it may not be the only option available.

Because this is a DB plan which promises periodic payments starting sometime in the future; it still nonetheless also has a total and specific value --- maybe several hundreds of thousands of dollars; of which you are entitled to some portion --- possibly 50% & potentially more given that you are disabled.

In short, for a moment forget the 100% payout while your "ex" lives followed by 50% later --- instead consider it an asset just like any other asset with a specific determinable value of which you are entitled to a portion (which is open to negotiation).

Any good divorce lawyer can either do the computations to determine the lump sum value or (s)he can quickly hire a good consulting actuary for 2 hours to get the number.

As an example, let's say the pension is worth $200,000; maybe you want nothing to do with the pension but feel you are entitled to $100,000 of other assets instead!!!



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Author: BarbieG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14051 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/25/1999 1:39 PM
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Thank you EVERYBODY for your help in educating me in this area!!! :-) I've printed everything out and as my attorney (who is only to advise me) begins talking in these legalese maybe I'll begin to understand things more clearly. You're right! I've got to tie things down tightly. Living on Disability ($607/mo) sure isn't going to go far enough in supporting me. And yes, after working for most of those 36 years I certainly DO feel that I'm entitled to more of his income. But that varies from state to state as I've learned. Ohio only tops out at 33% it seems. I'll be doing more research this week. Again, thanks tons for your help.
Barbie

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Author: jkrou Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14061 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/26/1999 11:18 AM
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Barbie:

From my experience with my Mother's divorce last year, you should also be entitled to a "separate maintainance" payment each month. In short this is because he has effectively been supporting you for this period after consideration of your SSDI payment amount. While it may not be a large amount, it would help to cover those monthly expenses. This type of arrangement is good until you remarry, if that would ever occur.

Jenn

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Author: paul100 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14066 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/26/1999 9:32 PM
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Hi Barbie,
Pixy's advice is right on target. I would only add that you should get that lawyer tomorrow if you haven't already. Don't use an "old family friend lawyer" or use the same lawyer as your husband. Call the American Bar Assoc., if needed to get a reference in your area.

Regards,Paul

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Author: millerd Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14075 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 12:48 PM
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Federal law requires that the normal form of retirement benefit is a 50% survivor benefit in favor of the spouse as a protection to the spouse...so the spouse is not left with $0 income.
However, in a divorce situation, you may be able to negotiate a benefit in a different form under a domestic relations order. You should discuss this with yor attorney.

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Author: pfry Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14089 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 4:51 PM
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That's great you were married more than 10 years. How about being married 8 years with 3 children, spouse leaves to marry another and has 2 more children of the second marriage, leaves that second marriage and marries a third time to a person who already has 2 children, then dies. The pension was given to last spouse who was a named beneficiary, first spouse who has not remarried gets nothing because marriage was not longer than 10 years and does not even qualify for social security benefits. What a life!

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Author: pfry Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14090 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 5:08 PM
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And the first spouse never remarried.

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Author: Franksluis Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14091 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 6:29 PM
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Normally when a person retires the spouse is entiteled to have a survivor benefit,hence the 50% offered by your husband's plan. However that provision applies AFTER the retirement of the plan participant. In states where there is comunity property and the couple have been filing joint income tax returs , salary the basis for for determining a participants's retirement benefit is consideres a comunity asset. There is jurisprudence where the wife is entitelded to part of the husband's living benefit, either in the form of lumpo sum or in monthly benefits, not the survivor benefit. If you want to contact me for more information my e-mail is franksluis@yahoo.com

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Author: BarbieG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14094 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 6:44 PM
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pfry.......How awful. Life sure isn't fair sometimes. That's why I'm trying desperately to do my homework and gather all the info I can. With the help of these wonderful people here, thank God.
Barbie

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Author: BarbieG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14095 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 6:50 PM
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Thanks Everybody....I'm still reading your good advice. I'm copying and pasting and saving everything. I do have a lawyer who is reviewing all the pension documents, etc and hopefully I'll have a clearer understanding of all of this soon. I might be back to ask more question tho. I'm so grateful to you all.
Barbie

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Author: acprg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14096 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 7:13 PM
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WARNING: LONG POST

Just to clarify and flesh out a couple of points that have been made:

First, there are two issues with respect to your ex-husbands pension plan. The first is how much you receive of his regular pension, and the second is how much you receive after his death in the form of a surviving spouse's benefit. In addition, you must take great pains to get a proper Qualified Domestic Relations Order, or everything else could be in vain (more about that later).

Regular Pension Amount:

This should be a percentage of his "accrued benefit" (annual benefit payable at age 65 that he had earned during the time you were married). Note that you don't have to wait until he starts his pension to get yours; you can start at least as early as the first date he would be eligible to start payments. The plan should give you a choice of how you want your pension paid.

For example, suppose the divorce settlement provides for you to get 50% of the benefit he accrued while you were married and the earliest he can get his pension is when he is both age 55 and has 5 years of service. If he meets these requirements on, say, 2/1/2000, then you can start your pension on that date regardless of whether or not he retires and starts his.

Now for the sticky part. Do you want 50% (in this example) or 50% of the value? Depending on your relative ages, it can make a big difference. Note that if you choose 50% of the value, you will still probably have to take it as a monthly benefit unless the plan has a lump sum option. In this case, try to get the plan to take your disability into account when it converts from the lump sum to the annuity as it should result in a higher monthly benefit.

The plan will be bound by whatever you end up agreeing on if you file a proper Qualified Domestic Relations Order with it (see below).

Surviving Spouses Benefit:

As has been noted, all defined benefit pension plans are required by law to pay benefits in the form of a 50% joint and survivor annuity unless the spouse agrees, in writing, to another form of payment. This is independent of anything you agree to with respect to splitting the benefit he accrued while you were married.

Unfortunately, most pension plans do not have good records regarding marital history, so making sure you get your benefit can be problematic. Here, again, get it in the Qualified Domestic Relations Order!

Qualified Domestic Relations Orders (QDROs):

The QDRO should be written by an attorney and signed by the court. It should tell the plan EXACTLY what you are to get from the pension plan.

Unfortunately, many if not most divorce attorneys don't really know how to write a solid QDRO; it's extremely technical. As someone recommended, get a competent pension actuary to help you translate what you and your ex-husband agree to into precise calculation language that can be included in the QDRO. The actuary can get information on how the pension plan works and help make sure you get what you're intending to get; in the world of pension math, "50% of his benefit" may not mean what you think it does!

When you have a good QDRO, make sure the plan gets it as soon as it has been signed, and make sure the plan advises you as to whether or not it is a valid QDRO. If you've had competent advice it should be, but you don't want all your hard work down the drain on some technicality. If the plan says that it's deficient in some way, you'll need to go back to the court with a revised QDRO.

Finally, TheBadger pointed out that you may want to forgo the actual pension benefit in favor of getting the value in some other form. This is definately worth considering, given the problems associated with QDROs. Also, depending on your health status given your disability, you are probably better off with anything that "front loads" benefits to you. Your ex-husbands pension plan may or may not take disability into account in its calculations; if not, your value will be converted to an annuity using the expected mortality of a healthy person, resulting in smaller payments to you and a loss of payments if you die before the healthy person would.

Sorry for the length and technical issues. Unfortunately, QDROs are sticky, sticky, sticky; you need good technical expertise to get it done right.

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Author: capt033 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14101 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 8:57 PM
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Hello Barbie,
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Author: pistamg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14102 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 10:28 PM
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Hello Barbie G
I like your question...
yes you should get some of his penion, as it was done here in canada not to long ago.if he is just leaving you because of a disability, he should by alrights pay for your health benifits too, as you will need it, or else soo him.. You want to save money in legal fees
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Author: BarbieG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14116 of 75859
Subject: Re: PENSION SURVIVORSHIP Date: 9/28/1999 8:23 PM
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ACPRG.......Thank you SO VERY MUCH. This is the stuff I need! An education. I've also printed this out for more bedtime reading. Plus further discussion with my attorney and my husband....(two different people!) I'm learning a lot. The more I learn the stronger I feel emotionally. This has been so very difficult. Thanks again!
Barb

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