In this marital dissolution case, we testified at trial that future pension benefits must be divided upon receipt of the benefits rather than based upon an actuarial valuation of them at trial.
Background: Plaintiff, a civil servant and not yet of retirement age, participated in two defined benefit pension plans both before and during the marriage such that a portion of the benefits were, without dispute, marital property. Neither of the plans allowed for a bifurcation of plan benefits. Defendant claimed that the benefits should be actuarially valued as of the trial date and that other marital property be provided in lieu of the allocable share of the valued benefits. Defendant retained an actuary to provide expert testimony in support of that position.
Success: We were retained by plaintiff to offer rebuttal testimony to defendant’s expert report. As part of our engagement and testimony at trial, we were able to demonstrate to the jury that an actuarial valuation of the plan benefits was inappropriate for a marital dissolution. This is chiefly due to the multitude of “unknowns” at the time of the trial such that they render the actuary’s report and testimony too speculative for use as a definitive marital property valuation. Some of those unknowns were:
- How long will plaintiff work before retirement?
- Would the COLA’s be at the maximum each year, if at all?
- How would plaintiff’s compensation change over the ensuing years?
- How long will the plaintiff or the defendant live, either before or during retirement?
We testified to 20 different scenarios that were each as plausible as the one presented by the actuarial expert and, thus, overly speculative. As an alternative to the actuarial valuation, we further demonstrated to the jury that a benefit sharing percentage, ideally determined at the future retirement date but also acceptable at trial, would eliminate most of the speculative issues and would be economically equitable to both parties. The jury agreed with our position and the actuarial determination of value was rejected in favor of establishing a benefits allocation percentage upon retirement.
LVF Practice Group Profile
Our Litigation, Valuation, and Forensics Practice Group (LVF) continues to balance its practice between our three core service areas of litigation support, business valuations, and forensic fraud investigations. As a part of this practice, we are well experienced in complex business litigation and large white-collar fraud investigations for which we have served as testifying expert on many occasions.
Valuation work continues to be a fundamental issue in litigation, merger and acquisition consulting, and shareholder disputes. Our involvement in business transaction support services continues to grow as we continue to differentiate ourselves from traditional CPA firms as valued partners to attorneys, government investigators, and lenders.
While many traditional CPA firms are generalists when it comes to LVF services, we have committed to this practice space one hundred percent with professionals dedicated to this specialty area.