David is 52 years old and expects to receive from his pension fund $2,600 per month at age 65 for 13.9 years. The financial planner has calculated that the present value of a fixed sum which could generate this income is $148,450. Based on this information, if David is divorced today, his wife Betty will be awarded:

Question

Quizplus · Accepted Answer

David's pension is considered a marital asset, which means that any portion of it earned during the marriage is subject to division between the spouses in a divorce settlement. In this case, since David is not yet retired and has not yet started receiving his pension, the present value of the income stream is used to determine the portion of the asset to be divided.

Assuming the couple has been married for the entire time that David was accruing pension benefits, Betty would be entitled to a portion of the pension asset. Since the present value of the pension is $148,450, Betty would be entitled to half of that amount, or $74,225. Therefore, the correct answer is D.

David Is 52 Years Old and Expects to Receive from His