Pension Plan Assets in the Divorce of a Professional Person
By: Marvin Snyder
When a professional person has incorporated and established a pension or profit-sharing plan for his corporation, he often is the trustee of the plan. He may be at one and the same time an employee, the 100% stockholder, an officer, the trustee of the plan and the respondent in a divorce case. In the case of equitable distribution in divorce, the person's control over the total plan assets is to be considered along with his individual present value of accrued benefits in the plan.
An example is a doctor with no full-time employees, who has a pension plan and a profit-sharing plan for himself. He decides on the amount of the contribution to the profit -sharing plan each year and he deposits the amount required for the pension plan, and he controls the investments of each plan. What if his account in the profit-sharing plan loses value due to poor performance of the plan investments? It could be argued that the decrease was caused by his actions as plan trustee, and that he has unilaterally dissipated marital assets.
In the case of a defined benefit pension plan, generally the plan assets are not a concern, because the actuarial present value of the participant's accrued benefit is determined. But, if the invested funds exceed the present value of the pension benefit, then the surplus plan assets may be looked to as a marital asset.