Pensions in Divorce: Understanding the Cancel v. Cancel Case
In a recent Florida case, Cancel v. Cancel (December 18, 2024), the court addressed how pensions should be divided during a divorce. The Second District Court of Appeal found that the trial court made a significant mistake in failing to fairly distribute the husband’s federal pension plan.
Here’s what happened: Both the husband and wife were federal employees with pension plans. The wife had already retired and was receiving her pension benefits, while the husband had not yet retired. The trial court treated the wife’s pension as income to calculate alimony but didn’t account for the husband’s pension since he wasn’t yet receiving it. This decision was appealed by the wife, and the appellate court ruled that this was unfair.
The appellate court explained an important rule: pensions can be treated as either income or property when dividing assets in a divorce—but not both. Since the husband’s pension wasn’t being paid out yet, it should have been treated as property to be divided fairly between the two.
The court laid out two methods to handle pension division:
- Immediate Offset Method: This involves figuring out the current value of the marital portion of the pension using a formula. However, this method requires an expert to calculate the value, which can be complicated.
- Deferred Distribution Method: This simpler method calculates the portion of the pension the spouse would receive as if the pensioner retired on the date of the divorce. The pensioner then pays that amount to the other spouse when they begin receiving the pension.
In this case, the appellate court sent the case back to the trial court to ensure the husband’s pension was divided fairly.
Why This Matters
This ruling highlights how important it is to properly evaluate and divide retirement assets during a divorce. If you or someone you know is facing a similar situation, consulting with an experienced attorney can ensure your rights are protected.
