Posted by Nydia Streets of Streets Law in Florida Divorce
How is a pension divided in a Florida divorce? It may seem difficult to divide a pension when a spouse is not yet retired, and therefore the amount to which the spouse is entitled is not yet known. However there are generally two methods in Florida for distributing a future pension benefit in a Florida divorce: “The first is to order an ‘immediate offset,’ in which the court distributes the portion of the pension's present value that was earned during the marriage. [internal citation omitted]. This marital interest is calculated by multiplying the present value of the pension by a ‘coverture fraction’ in which the denominator is the total time the employee has participated in the retirement plan and the numerator is the time the employee has been married during that participation. Id. [. . .] The other, simpler option is a ‘deferred distribution.’ Under this approach, the court must have evidence of the amount of the employee's benefit assuming ‘he retired on the date of the final hearing without any early retirement penalty.’ Id. ‘The court then multiplies this dollar amount by the percentage to which the other spouse is entitled.’ Id. This results in a fixed dollar amount that is to be deducted and paid to the other spouse each time the pension holder receives a pension benefit.” Pension valuation and distribution was discussed in the case Cancel v. Cancel, 2D2023-0471 (Fla. 2d DCA December 18, 2024).
Both parties to the marriage were federal employees. During the marriage, the former wife retired and began collecting on her federal pension. The former husband continued to work and was still employed by the time a petition for divorce was filed. The trial court treated the former wife’s pension as income in determining alimony since she was already collecting from it. The trial court declined to distribute the former husband’s pension because he was not yet collecting on it, and the court reasoned it could not determine the present value because neither party presented evidence on this. The former wife appealed.
The appellate court noted “In Diffenderfer v. Diffenderfer, 491 So. 2d 265, 270 (Fla. 1986), the supreme court recognized that courts may treat the marital interest in a retirement account either as property to be equitably distributed or as a source of income for support purposes. Given that Ms. Cancel's pension was in pay status, the circuit court appropriately treated it as a monthly income source when determining the amount of her permanent periodic alimony award.” The court also noted "The Diffenderfer court observed that ‘[i]n most cases . . . it may be preferable to deal with pension rights as a marital asset rather than’ as a future income stream.”
The court concluded “In the instant case, the record before the circuit court included all the information necessary for calculating the marital portion of Mr. Cancel's retirement benefits and ordering a deferred distribution of Ms. Cancel's share. The court erred in its conclusion that it could not distribute the marital interest in the pension, and it abused its discretion by simply leaving the matter for future consideration when Mr. Cancel retires.”
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