Today, more often than not, the family home is not a couple’s greatest asset. Although it used to be, the defined benefit pension may now be worth more than the home. For many years, homes were going up in value. During the boom in early 2000, some prices were going up 30% or 40% in one year. Since then, prices leveled off, and many have gone down.
Now, more and more clients are coming to mediation with:
Little equity in the house;
Some equity in the house;
Negative equity in the house.
It is now less common to find couples with paid off mortgages or who have a lot of equity in the house, thus the pension has become the largest asset.
So what is a pension worth?
I encourage couples to go to a website like PensionAppraisals.com to find the value of the pension. They will receive a pension report determining the marital portion available for equitable distribution. In mediation, while negotiating the assets of the marriage and whether they should trade one asset for another of similar value, we need to know the value of the pension.
Some pensions have a lot of “moving parts.” For example, in a New York City police officer’s pension, you really have to understand:
If there is an ASF shortage or overage?
The amount of the VSF payment;
Whether loans have been taken out against the pension;
If the police officer has a rank beyond patrolman; and if so are, whether they are a member of the Sergeants Benevolent Association or Superior Officer’s Annuity; and
Whether there is a disability pension.
The mediator has to have a thorough understanding of the moving parts of the pension and their values, so that he/she can help the couple negotiate their Agreement.
Before you choose a mediator, ask them if they understand how your pension works, and to explain it to you. If you are satisfied with their expertise, it is more likely that they are capable of helping you to create an agreement that may divide your greatest asset.
Do you understand what your pension is worth?