By a Doylestown, Bucks County Divorce Attorney
Marital property subject to division during Equitable Distribution in Bucks County, Pennsylvania can include a variety of assets, specifically deferred income that is commonly found in pension programs, such as the Pennsylvania State employee Retirement System.
In the event an asset comprised of deferred income is being divided pursuant to equitable distribution prior to the asset reaching pay status, there are two main ways the Court can use to divide the asset: immediate offset and deferred distribution.
PA Marital Property Division Methods
The immediate offset method is typically the cleaner way of dividing such an asset, whereby the individual who will be receiving the deferred income in the future will receive the entire asset at the time it reaches pay status. The other spouse then receives an immediate offset, whereby other marital assets are given to this spouse immediately based on this spouse’s hypothetical share of the deferred income. This method is typically used in higher net worth estates where there are multiple assets subject to division.
With the deferred distribution method, each spouse can receive a portion of the deferred income when it reaches pay status in the future. This can be an attractive method as well, especially in marital estates where the deferred income may be the only valuable asset.
As with most cases that go through the equitable distribution process, spouses are able to reach an agreement as to how a marital asset should be divided, choosing between an immediate offset or deferred distribution method. These agreements are typically not submitted to the Court, as the Court has a great interest in people settling their issues amicably. A recent Superior Court decision from August of 2019, however, dealt with a situation where the trial court stepped in and chose a different path for the spouses.
PA Case Law Regarding Marital Property Division
In Connor v. Connor, the trial court determined that although the parties agreed upon a deferred distribution method, the court thought it would be more appropriate to use an immediate offset. This was challenged by the parties and the Superior Court held that the trial court improperly used the immediate offset, especially since the parties agreed to use a deferred distribution method.
This case presents a variety of important legal determinations; however, for those who have deferred income retirement plans, such as pensions, it is a crucial decision that upholds the importance of having both immediate offset and deferred distribution methods available. If you are faced with a divorce in Bucks County, Pennsylvania and have a deferred income retirement plan, please call us at (215) 968-1800 or contact us online. We offer evening and weekend appointments for your convenience as well as telephone consultations, if you live far away from our office. We also communicate with our clients via e-mail and respond immediately to all of your questions and needs.
We look forward to hearing from you and helping you.