Valuing a Pension for Divorce is a Wise Investment

retirement accounts in divorce
valuing a pension for divorce

Are you losing thousands of dollars because of your financial fears during your dissolution or divorce?

The cost of the divorce itself is one of the biggest fears I hear from clients. There is no question. It will generally take longer and cost more than you expected. However, that does not mean it's a good idea to cut corners.

Valuing a pension for divorce: Don't cut corners

One frequent corner cut is a pension valuation. Pension valuations do not take a lot of time. However, they do require you to work with someone other than your attorney. Thus, even when recommended by their attorneys, many clients choose not to have them done.

It is not even necessary to meet with your valuation expert in person. All required information can be provided via phone/email. In some cases, the attorney can even provide all of the relevant information. I recognize that it can feel stressful and overwhelming to work with yet another professional and have yet another bill to pay. However, it could be one of the best returns you ever receive on an investment.

Pension Valuation: What You Will Learn

As I mentioned before, you will find that the value from the most recent statement is not the value that should be considered when dividing assets. There are numerous variables to consider when valuing a pension for divorce. We look at how much of the pension was earned during the marriage as well as the amount of the benefit earned. We make actuarial assumptions regarding age and life expectancy. Payments are discounted back using the risk-free rate, which fluctuates as interest rates rise and fall.

Think about it in terms of the house, an asset that the average person is more comfortable discussing. When discussing the value of your home, would you use the value of your home on the date of purchase if you bought it 10 years ago? Probably not. Just as it is imperative to get an appraisal on your home, it is equally as critical that you get a valuation on any pensions that are part of your marital estate.

While you think you're saving yourself some money by not getting it done, you may actually be giving up a lot more than you would be spending. If you would like us to help you with your pension valuation, schedule a 15-minute call so we can discuss the information needed to get started. 

For additional information about Ohio public pensions and divorce, visit our Divorce Resources page.

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