lisacodd said:
California Resident
Re: House
My husband and I separated in 1998 (we never filed legal separation) and filed for divorce in 2001. I'm keeping the home and have made all payments (mortgage, property taxes, insurance) since our separation. When buying out his interest in the house, do I use the value of equity in 1998 when we separated or value of equity in 2001 when we filed for divorce?
Re: Pension
I'm entitled to 1/2 of husband's pension. Is my share calculated up to 1998 when we separated or 2001 when we filed for divorce?
My response:
Because legal separation was never filed in 1998, all the assets are divided equally based upon their values as of the filing date in 2001. Had you filed for legal separation in 1998, that would have put the brakes on the "valuation of the assets" as of that time. However, you will be entitled to a reimbusement from his share of the current valuation for all monies you've paid since your separation.
For example, in 1998, the house was worth $50,000.00. You then separate.
Then, in 2001, you file for divorce, and the house is now valued at $100,000.00; but, you've paid $5,000.00 in mortgage payments and taxes since 1998. His share would now be $50,000.00, minus the $5,000.00 you've already paid since the separation, for a net division to him of $45,000.00.
Division of pension and retirement benefits presents special problems. Where the benefits are attributable to employment both before and during marriage and/or before and after separation, the first task will usually be to apportion the CP vs. SP interests. Then, depending upon the manner of division adopted, valuation can be particularly problematic--the determination must reflect whether the rights have vested and matured and the type of plan in question ("defined benefit" or "defined contribution").
For an excellent discussion of apportionment, valuation and division, see Marriage of Bergman (1985) 168 Cal.App.3d 742, 748-760, 214 Cal.Rptr. 661, 664-672, and Marriage of Baker (1988) 204 Cal.App.3d 206, 210-211, 251 Cal.Rptr. 126, 127-128.
Unless the benefits derive solely from employment while the parties were married and living together, an apportionment of community and separate interests will be required.
Since benefits attributable to postseparation employment are separate property, the community interest is determined as of the date of separation. However, if the court retains jurisdiction, valuation of each spouse's share can be made at date of retirement (since increases in value will be partially due to employment during marriage). [Marriage of Jacobson (1984) 161 Cal.App.3d 465, 474-475, 207 Cal.Rptr. 512, 518; Marriage of Marsden (1982) 130 Cal.App.3d 426, 448, 181 Cal.Rptr. 910, 922; Marriage of Adams (1976) 64 Cal.App.3d 181, 186-187, 134 Cal.Rptr. 298, 302]
Pension rights may be "vested" or "nonvested": They are vested if the right to the benefits would survive the employee's discharge or voluntary termination; whereas nonvested pensions require additional service before the employee becomes eligible for benefits. Similarly, pension rights may be "matured" or "unmatured": They are matured if the employee has an unconditional right to retire and obtain immediate payment (i.e., employee would obtain the benefits even if employment were terminated); whereas they are unmatured if the employee has not yet reached retirement age (i.e., no benefits would be received if the employee were to retire at that point). [Marriage of Bergman, supra, 168 Cal.App.3d at 748, 214 Cal.Rptr. at 664, fn. 4]
Both "vesting" and "maturity" impact valuation of pension rights. However, neither is consequential to whether there is a community property interest in the benefits. Even nonvested pension rights represent a property interest; to the extent these rights derive from employment during marriage (and before separation), they are a community asset subject to division at marriage dissolution. [Marriage of Brown (1976) 15 Cal.3d 838, 841-842, 126 Cal.Rptr. 633, 634-635; Marriage of Lehman (1998) 18 Cal.4th 169, 177, 74 Cal.Rptr.2d 825, 828; Marriage of Bergman, supra, 168 Cal.App.3d at 756, 214 Cal.Rptr. at 670]
Subject to statutory limits governing the particular retirement plan (e.g., certain public employee pension plans), no particular formula need be adopted in allocating retirement benefits between the separate and community estates. "[T]he court has very broad discretion to fashion an apportionment of interests that is equitable under the circumstances." [Marriage of Gowan (1997) 54 Cal.App.4th 80, 88, 62 Cal.Rptr.2d 453, 456-457]
The apportionment method employed, however, must be reasonable and fairly representative of the relative community and separate contributions. [Marriage of Lehman (1998) 18 Cal.4th 169, 187, 74 Cal.Rptr.2d 825, 835; Marriage of Poppe (1979) 97 Cal.App.3d 1, 11, 158 Cal.Rptr. 500, 505]
Since retirement benefits are usually based on the number of years the pensioner was employed, apportionment is usually accomplished under the "time rule": i.e., the community is allocated a fraction of the benefits, the numerator representing length of service during marriage but before separation, and the denominator representing the employee's total length of service. (For purposes of the fraction, service can be broken down into years, months or days.) [Marriage of Gowan, supra, 54 Cal.App.4th at 88, 62 Cal.Rptr.2d at 457; Marriage of Judd (1977) 68 Cal.App.3d 515, 522-523, 137 Cal.Rptr. 318, 321; Marriage of Cobb (1977) 68 Cal.App.3d 855, 861, 137 Cal.Rptr. 670, 674]
Use of the time rule is reasonable so long as the amount of the retirement benefits is substantially related to the number of years of service. And the result reached under the time rule is reasonable so long as the relative contributions of the community and separate estates are accounted for. [Marriage of Lehman, supra, 18 Cal.4th at 187, 74 Cal.Rptr.2d at 835]
Example: W begins employment January 1, 1974 (while single) and marries H July 1, 1984. H and W separate on December 31, 1989 and obtain a judgment of dissolution on February 14, 1994. W had retired on January 2, 1994 after 20 years of service.
The length of employment attributable to community efforts is 5.5 years and the total length of service is 20 years. The community therefore has a 5.5/20 interest in W's pension and H is entitled to 1/2 of that.
Good luck to you.
IAAL
