Marital Property Notes

Marital Property Notes

Discussions of Pension and Retirement Benefits (p. 336):

Marriage of Poppe (1979) (p. 336)

1. Facts:

H entered the Navy on July 1937.
The parties were married in 1946.
They were divorced in 1973.
The H continued to work for the Navy till 1977.
The Navy gives out pension based on pt. system based on how long you work in the Navy.
The H had earned a total of 5002 pts, of which 3000 were earned while married to W.

2. The Time-Rule:

The time-rule is not the only acceptable method for apportioning retirement benefits btw the CP and SP, but it is the most frequent method used.
The apportionment basis of the rule is appropriate only where the amt of retirement benefits is substantially related to the number of years in service.
To calculate: the numerator rep. the length of service during the marriage but before the separation, and the denominator of which rep. the total length of service by the employee-spouse.

3. Application to this case: The H’s pension is not substantially related to the no. years he served in the Reserve. The only relationship btw the no of yrs. Of svc and the pension is that to be eligible for pension, H must have served a min. no. of years.

4. Holding: B.c of the way the pt system works and since the pension is not based on the no. of years the H served in the navy, this would be an instance were the time-rule should not be applied.

Marriage of Gowan (1997) (p. 340)

1. Facts:

H and W were married in June 1957
In 1960, H bean employment with Beckman. He was employed there till 1974. H earned $30k/yr.
H and W divorced in 1979, the W deferred payment of pension till the H received it. At that time, H was supposed to get only $137/month
In 1989, H went back to work with Beckman. He now earned more than a $100K/yr. He retired in 1994.
The pension in Beckman added his past and present pension to get 18 yrs. Of svc to the company. He thus, got $3400/month from the company.

2. Time-Rule:

Under the time rule, the comm. Is allocated a fraction of the benefits, the numerator rep. length of service during marriage, but before separation, and the denominator rep. the total length of service by the employee-spouse.
Even where an employee’s service is not continuous, a pension based upon total svc yrs. May be divided according to the time rule.
A H and W share the same qualitative int. in the retirement rts, and the fact thaqt a plan reflects subsequent salary increases does not alter the comm’s int. in those rts. – an employee’s contributions in the early yrs. Of employment during the marriage, even though based on a smaller salary, may actually be worth more than contributions during the post-separation yrs, due to longer period of accumulated interest and investment income prior to the payment of those benefits.

3. Application:

The Beckman Benefits’ Pension Plan clearly states that the pension that H is receiving is based on H’s work when he was married to W.
Although H had 2 separate employment periods with Beckman, his pension was based upon his total svc yrs. The time rule fairly accts. For both the marital and post-marital yrs. Of svc. B.c it assigns to the community only a portion of the pension corresponding to the protion of svc. During marriage before separation.

Marriage of Forrest (1979) (p. 344)- OVERTURNED

1. Facts:

W worked in the fed. Civil svc system. She separated from employment and w/drew her retirement contributions.
At time of trial she had resumed fed. employment and had begun reinstating by means of monthly payroll deductions.
H contends the W’s present rt to purchase the retirement annuity has a value. H says that if W does reinstated her pension, he should get his share based on 9 yrs. Of contributions during the marriage.

2. Applications:

The alleged pensions is nonexistent at the time of the trial. Its existence is subj. to the condition of W’s reinstate the part that she had taken out before.
This may not happen, b.c Nancy could die before it is reinstated,
Also the community was not depleted by W’s past contributions, b.c the W w/drew the pension during the marriage and used it for CP. Her present contribution is from her SP.

3. Holding: The W does not have to share the pension with her H, since her community was not depleted by the contribution during they were married and now the pension is based on her SP.

Marriage of Lucero (1981) (p. 345)

1. Facts:

H worked for the fed. gov’t from 1942-1977.
H’s employment was not continuous but was interrupted several times.
At retirement, H received credit for 30 yrs.
He had w/drawn his retirement contributions to date in 1966.
To obtain the max. retirement benefit, he had to redeposit these funds, in the amount of $10K.
H did redeposit this amt, after separation from W, using his own SP.
On Oct 1977, his monthly retirement benefit was $840/month. If H had not redeposited his retirement contributions, would have been k $474/month.
H w/drew his retirement contribution in 1966y and the money was spent for CP.
When the parties, separated in 1976, only a negligible amt (about $50)P had been redeposited.
H retired one yr. later, in 1977, and made the redopsit using SP funds.
W offered to reinstate the pension of H, so that she could also get benefit from the pension payments.

2. Application:

The community owns all pension rts. Attributable to employment during the marriage.
The TC erred in failing to recognize W’s rt to elect to share in the increased retirement benefits upon payment of pro rata share of the redeposit.
Overruled the Forrester (look at previous case)
The fact that a contractual rt is contingent upon future events does not degrade that rt to an expectancy.

3. Holding: The W should have the rt to help reinstate the pension rt. And get part of the pension after the divorce. There is no diff. btw ordinary nonvested pension rt. And a nonvested pension subj. to the single additional contingency of redeposit of retirement contributions previously w.drawn.

Disability Benefits (p. 350):

Marriage of Jones (1975) (p. 350):

1. Facts

H entered the military service in 1957.
H married W in 1964.
H lost a leg in Vietnam in 1969 and retired with disability benefits of $379/month.
H served only 12 yrs., had no vested rt to a pension b.c of the longevity of svc; he receives a pension only b.c of disability.

2. Rules:

A serviceman’s rt to disability pay, acquired before such a serviceman has earned by longevity of service a vested rt to retirement pay, is not a CP.
The veteran’s rt to disability payment, and the amt of the payments, depend primarily on the existence and the extent of the disability.
The disability payments compensate the veteran for the pain, suffering, and the misfortune caused by his disability. It can never be wholly shared even by a loving spouse and surely not after the divorce.

3. Holding: A married serviceman’s rt to disability pay, unlike a vested rt to retirement pay, does not compromise a CP asset and thus does not become subj. to division upon dissolution of the marriage. The disability pay is not a form of deferred compensation for past svc, rather it serves to compensate the veteran for the personal anguish caused by the permanent disability as well as the loss of earnings resulting from his permanent military retirement and from diminished ability to compete in the civilian job mkt.

Marriage of Stenquist (1978) (p. 353)

1. Facts:

H joined the Army in 1944 and married in 1950.
In 1953, he suffered an injury that lead to amputation of his left arm.
He continued his military svc until he retired in 1970.
The H and W divorced in 1974.
The H can opt for either disability or pension.

2. Rules:

The serviceman’s election of a disability pension cannot defeat the community interest in his rt to a pension based on longevity.
Only a portion of H’s pension benefit payments, though termed “disability payments”, is properly allocable to disability. It would be unjust to deprive W of valuable prop. rt. Simply b.c a misleading label has been affixted to H’s pension fund benefits.

3. Application:

The H here did not retire permanently from military svc. To face the prospect of competing on the civilian labor mkt handicapped by his disability.
H did not begin to receive disability pension until 17 yrs. After the injury.
The value of his present disability pension depends largely on the high military rank he had achieved at the time of retirement and his extensive military service; it does not relate to his rank or longevity at the time of his injury.
Where the employee spouse elects to receive disability benefits in lieu of a matured rt to retirement benefits, only the amt. thus received over and above what would have been received as retirement benefits constitutes compensation for personal anguish and loss of earning capacity and is, thus, the employee spouse’s SP. The amt. received in lieu of matured retirement benefits remains CP subj. to div. to dissolution.

Severance Pay (p. 357)

Marriage of Wright (1983) (p. 357)

1. Facts:

Parties separated in 1976, after 12 yrs. Of marriage.
In 1976, the H received $25K from his employer. This was not a bonus for past work, but equaled approx. 1 yr. pay and was given b.c of his termination due to harassment caused by his W and father in his work.
It was a lump sum payment was voluntary on the hospital’s part and was not part of the employment K.

2. Rule:

The instant case is analogous to cases involving disability benefits. Such payments serve the principal purpose of compensating the disabled employee for his/her injury including prospective loss of earnings and diminished earning capacity.
Disability payments paid after separation consistently have been held to be the SP of the spouse who receives them, except for that portion of the payment which is payable as a pension.

3. Holding: At bench the termination payment was made in recognition that H would encounter difficulty in securing future employment which would entail prospective loss of earnings. Since it was paid after separation it is clear it was SP.

Early Retirement Benefits (p. 360)

Marriage of Lehman (1998) (p. 360)

1. Facts:

H was hired by PG & E in 1959.
H and W were married in 1960.
In 1962, H began to participate in PG & E’s defined retirement plan, and began to accrue a rt. to retirement benefits under it.
On Oct 29, 1977, the couple separated.
H decided to retire early, with enhanced retirement benefits – with $3000 more than if he had waited to retire.

2. Rules:

All prop. Acquired by a spouse during marriage before separation is CP.

Such prop. May include the rt. to retirement benefits accrued by the employee spouse as deferred compensation for svc. Rendered.

If the rt. to retirement benefits accrues, in some part, during marriage before separation, it is a community asset and is therefore owned by the comm.. in which the nonemployee spouse as well as the employee spouse owns an interest.
It follows that a nonemployee spouse who owns a CP interest in an employee spouse’s retirement benefits owns a CP interest in the latter’s retirement benefits as enhanced.

The Fiduciary Duty (p. 413):

1. It is frequently said that the spouse who manages and controls a particular community asset acts as a fiduciary with respect to the other spouse’s interest in the asset.

2. California Family Code Section 721 (p. 413)

In transactions btw themselves, a H and W are subj. to the general rules governing fiduciary relationships which control the action fo persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair delaing on each spouse.

3. California Family Code Section 1100(e) (p. 414):

Each spouse shall act with respect to the other spouse in the mgmt and control of the CP in accordance with the general rules governing fiduciary duty.
This duty includes the obligation to make full disclosure to the other spouse of all material facts and info regarding the existence, char., and valuation of all assets in which the comm. Has or may have an int. and debts for which the comm.. is or may be liable and to provide equal access to all info, records, and books.

4. CA Family Code Section 1101 (p. 414)

A spouse has a claim against the other spouse for any breach of the fiduciary duty that results in impairment to the claimant spouses’ present undivided ½ interest in the comm. Estate, including, but not limited to a single transaction which will cause a detrimental impact to the claimant spouse’s undivided ½ int. in the comm. Estate.

5. CA Family Code Section 2602 (p. 415): As an additional award or offset against existing prop, the ct. may award, from a party’s share, the amt. the ct. determines to have been deliberately misappropriated by the party to the exclusion of the int. of the other party in the comm. Estate