Articles

The Legal Intelligencer

Monday, August 3, 1998
Survivor Annuity is a Marital Asset
By: Julie A. Auerbach

A survivor annuity is a marital asset, according to the Superior Court in Palladino v. Palladino.

The court held that a survivor annuity which derived from a pension has a value independent of the pension. Since wife elected to receive the survivor annuity, she was properly charged with the value of the annuity in the equitable distribution scheme.

In Palladino, an order was entered pursuant to a petition for special relief which allowed husband to take an early retirement and in exchange husband would elect for wife the survivor annuity available to her through his pension. The survivor annuity election reduced the monthly pension benefit of husband by $82 per month.

Mark Altschuler of Pension Analysis Consultants Inc. valued the pension with the survivor annuity election at $93,202 and without the survivor annuity election at $108,241. However, he also valued the survivor annuity independently from the pension at $57,480 He valued the survivor annuity by utilizing the concept of a single premium annuity which is an annuity purchased today in one payment in order to provide a monthly benefit in the future. He opined that the cost to purchase wife's survivorship interest as a single premium annuity would be $57,480. This was the value assigned to it by the trial court.

The trial court found that the survivor annuity was marital property and charged wife with its value. The trial court refused to value the survivor annuity at the difference between the value of the pension without the annuity less the value of the pension with the annuity.

The Superior Court, in an opinion by Judge Patrick R. Tamillia, upheld the trial court's decision. As a result, the wife did not receive any of the husband's pension. She got only the survivor annuity. It may have been of significance to the court that wife was significantly younger than husband. Her chances of receiving the survivor annuity were good.

Husband did not have to pay any extra money for this annuity. It was simple a benefit of his pension plan. If wife had not elected it, she would have been entitled to receive an equitable portion of the marital portion of the value of the pension.

Husband receives a windfall by getting his whole pension simply because wife receives the survivor annuity. His monthly pension benefit is reduced by only $80 per month. However, wife is not entitled to receive any of husband's pension until his death. This decision has not been appealed by either party, and therefore is the current state of the law on this issue.

(Copies of the 10 page opinion in Palladino v. Palladino, PICS NO. 98-1498, are available from The Legal Intelligencer. Please refer to the Pennsylvania Instant Case Service order form on Page 9.)

Published with permission from The Legal Intelligencer

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