Monday, March 29, 2010

Victim #157: How Double-Dipping For Alimony Affects Your Retirement Account

Excerpt from an email discussion on retirement accounts

..... One of the problems with finding a case that counters the 2005 "Acker v Acker" Supreme Court [in Florida] precedent is that it seems to take about three years for a case to move from county court to the appeals court, and another three years to just get to the Florida Supreme Court, much less be published.   Basically, any case that would do me any good, has probably not even made it to an appeals court, yet. 
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..... I have a problem with Mr. Schultz's analysis of the "Acker v Acker" precedent and his discription of "Double-Dipping" in conjunction with how retirement plans should be counted.   He discusses treating pre-divorce accumulations in retirement plan as being subject to being divided as a marital asset, then treating Post-divorce accumulations as a source of income to be used to calculate alimony.   What he doesn't take into account is when in the initial divorce division of assets, BOTH the pre- as well as post-divorce accumulations are considered.  

In Mr. Acker's case, his half of the assets included ALL of his retirement plan.   His Ex received other assets to offset his getting this retirement plan.   I am in a similar boat in that I gave up exactly half of my pre-divorce accumulations in my retirement.  I also gave the Ex over 100K in exchange for any future accumulations.  

Now a decade later she has spent much of the retirement that was turned over to her, but mine is still intact.   Under "Acker" the ONLY thing that counts in a Modification of Alimony hearing is "Need vs Ability to Pay".   Since she has spent a lot of her retirement assets, and I haven't, guess who the court thinks is in "Need" and who has the "Ability to Pay" ? 
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..... Here is a senerio that more clearly shows how unjust the "Acker" precedent is.
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..... Mr. & Mr. Smith get divorced simultaneously with his retirement.  Under the divorce agreement each party gets half interest in his retirement pension plan.  As with many pension plans, there is an option to either take all the benefit as an annuity ..(lifetime monthly payments).. or as a lump-sum, or proportioned between the two.  

Mr. Smith chooses to take his half as $2,000/mo. annuity.   the Ex chooses a $1,000/mo. annuity and $150,000 as a lump-sum.   Several years later after the Ex has spent all of her lump-sum, she ask the court for alimony since she is in "Need" by having only $1,000/mo. and Mr. Smith has the "Ability to Pay" from his $2,000/mo. income.  

Under the "Acker" decision, the equitable distribution of assets during the initial divorce does not count, only the present difference of income.   Therefore, she would be awarded alimony  which could only be paid from his remaining half of his pension.

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