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New Jersey Court says its Fair to Make Husband Pay for Cost of Wife’s Survivor Benefit in Pension

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When divvying up the marital property in a divorce, it may be that one spouse has an interest in a pension or retirement plan, and that interest may be considered marital property subject to equitable distribution under New Jersey divorce law. Most retirement plans, however, are governed by strict rules that prohibit the plan administrator from transferring or assigning any interest in the plan to someone other than the employee. In these situations, it may be necessary to get a court order directing the plan administrator to make the transfer. Such a court order is known as a Qualified Domestic Relations Order, or QDRO for short.


A recent case in the New Jersey appeals court shows how complicated cases dealing with QDROs and pensions benefits can be. In the divorce case of Ackad v. Gobrial, the Family Court had ordered the husband to execute a QDRO designating the wife as the irrevocable beneficiary of a 25% survivor benefit under his pension. The husband argued that giving the wife a survivor benefit reduces his lifetime monthly retirement payment by several hundred dollars. The judge ordered the survivor benefit anyway but required both parties to share equally in the payment for the survivor benefit and ensuing reduction in the husband’s monthly retirement amount.


On appeal, the husband argued that the Property Settlement Agreement (PSA) did not give the wife any survivorship rights in his pension, and it’s not fair to grant that right and make him pay for it. The court decided that it was fair, however. For one thing, the husband got a benefit by not being required to pay his wife at the time of the divorce for her share of the present value of the marital portion of the pension benefit. Therefore, it is fair to make him pay half the cost of the survivor option in order to secure her receipt of the benefit.


Husband’s Less-Than-Candid Disclosures Didn’t Help Him Either


The husband had failed to disclose the existence of his pension until pre-trial mediation, when he should have done that much earlier during discovery. The details of the pension, including survivor annuity options, were not even disclosed by the time of trial. The Property Settlement Agreement (PSA) had left this issue unresolved, pending more details on survivor benefits and a decision by the court if the parties could not reach agreement.


The PSA also did not require the payment of any alimony. Instead, the parties agreed to equally split their IRA and 401(k) plans and equally divide the value of the husband’s pension from the date of marriage through the divorce complaint; the question of a survivor’s benefit had been explicitly reserved to another day.


Under these circumstances, the appellate court found no reason to disturb the Family Court’s decision to make the husband grant a survivor benefit to the wife and share in its cost.

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