§4.02 Methods of Division

You have broad discretion in dividing the community interest in a spouse's defined benefit pension rights. You can exercise your discretion in either of two ways [Marriage of Bergman (1985) 168 CA3d 742, 749, 755]:

• Cash-out method:  You determine the present value of the pension based on actuarial evidence presented by the parties. You then determine the community property interest in the present value based on the percentage of the party's employment while married and before separation. Finally, you award the pension right to the employee and award offsetting assets, an equalizing payment, or both to the other spouse.
• In-kind division:  You determine the percentage of the pension that is community based on the spouse's employment during marriage and before separation. You order one-half of the community portion paid to the nonemployee spouse as it is received. You may reserve jurisdiction to supervise payments as they become due.

In dividing nonvested pension rights, death or termination of employment may destroy the rights before they mature. In some cases you may be able to evaluate the risk in determining the present value of the rights. If uncertainties affecting vesting or maturation convince you not to divide the present value, you may award each spouse a portion of each pension payment as it is paid. [Marriage of Brown (1976) 15 C3d 838, 848.]

Valuation of defined benefit pension plans is discussed in §2.10.