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Michigan Law - Can Pension Plans Be Divided? Pension plans of either party, vested or unvested, may be divided. The court uses one of two ways to do this. The two ways are:
Section 25.131(4). Cases: Keefer (1985) 141 Mich App 751 (The court found that the wife did not need alimony now, but that she might need it in the future. So it left it open for the wife to come back into court to ask for alimony. In particular, the court thought that the wife might be entitled to alimony starting when the child support payments ended. The husband had taken early retirement, and the pension was already being paid. In this circumstance, the court declined to give the wife a lump-sum portion of the pension. The court preferred to divide the pension by letting the wife have alimony payments out of the pension receipts -- but only at some future date. There were no assets the court could award to the wife as a lump sum payments. At the divorce, the husband was 61 and the wife was 47. There were three children. Only the youngest, age 14, lived at home. He lived with the wife.) Tigner, 90 Mich App 787 (In this case the judge considered the present value of the husband's vested pension rights in dividing the marital estate. The judge awarded the husband his pension rights valued at $5,400. The pension was payable upon his terminating employment and reaching age 60, or reaching age 65. The husband was also awarded $918 in cash, and a 5 year old Jeep. The wife was awarded the house, valued at $46,000, $1,000 in cash, and a 4 year old Chevy. In dividing the marital estate, the judge took into account that the wife was earning $3,000 a year while the husband was earning about $25,000. The parties had been married for 23 years.) Kilbride, 172 Mich App 421 (In this case, the court decided that, in dividing the marital estate, the husband's pension should be valued and a fixed distribution arranged between the parties, at the time of divorce. The court did not use a division dependent upon the future accrual of pension benefits after the divorce, or those earned before the marriage. The marital share of the pension could not be influenced by future actions or decisions like how much longer the husband would continue working. Under his pension plan, the longer the husband worked, the higher his pension benefits would be. If the husband, age 50, retired at the time of the divorce the plan would pay $24,000, annually when he turned 65. If the husband retired two years later, the plan would start paying more per year. Also, the court did not want to leave unresolved the date at which the wife would start receiving pension benefits. In determining the present value of the marital share in the pension, however, certain assumptions had to be made. The court had to assume that the husband would retire as soon as the plan permitted, and that the husband's salary would be the same as it was at the time of the divorce. Additionally, the court had to value the pension solely upon the number of years which had accrued during the marriage. The parties were married for 26 years and had four children, all of whom had reached majority at the time of the divorce. The husband was earning $60,000 a year, while the wife, a teacher in treatment for severe depression, was currently unemployed. The wife was awarded $26,000 a year in alimony in addition to half the proceeds from the sale of the marital home, a car, $6,000 in retirement and savings accounts, and half the value of the parties' life insurance for a value of about $95,000. The husband received about an equivalent portion.) Rust, 143 Mich App 704 (In this case, the judge awarded the wife approximately 30% of the husband's monthly pension benefits, in the form of alimony. Although the husband would receive $21,000 a year in pension benefits, he had reduced the annual payment by $2,500 so that the wife would continue receiving his full pension after his death. The husband was also obligated to pay the wife $2,700 a year in alimony. At the time of the divorce, the husband was earning $5,000 a year and the wife, $8,000.) Bolt, 113 Mich App 298 (In this case, the court determined that the vested interest in a pension plan, to the extent it can be valued, is to be considered marital property, subject to division. However, if it can be shown that it is unlikely that any benefits will be received from the plan, because of its speculative nature or questionable solvency, the court may exclude it from division with the marital assets. Under the husband's "individual account plan," his employer would contribute funds on an annual basis, and as profits allowed, to a pension fund. Depending on the success of these investments, the fund, and the husband's portion could experience an annual net increase or decrease in value. Under the plan, the husband's account balance would vest an additional 10% a year. At the time of the divorce, of the $12,000 in the husband's account, $8,000 had vested. However, the husband could only receive benefit from the plan upon the termination of his employment, or his death. The court found it unreasonable to require the husband to quit his job. The court also could not require distribution of amounts which did not accurately reflect the worth of his account upon his likely future retirement date.)
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