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Valuing an Annuity

Did you know that, with Family Law Software, you can value annuities?

You can, and here’s how!

  1. Create a defined benefit pension asset.
  2. Specify the owner, and click “more info.”
  3. Enter the information asked for by the “more info” screen, entering the information about birth dates, payment amount, etc.
  4. Enter the annuity’s payment start date as the retirement date.
  5. That’s it! The value shown for the defined benefit pension is the value of the annuity.

Why does this work?

Because in both cases, you are simply valuing a stream of payments that will start at a specific time and end at the death of the recipient.

The fact that one is being paid by a former employer and one is being paid by an insurance company is not material to the value of the stream of payments.

If, for some reason, you wanted to exclude consideration of mortality, you could simply use your tool to value the present value of alimony.

That tool does not take mortality into account.

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