Retirement benefits are an important piece of the puzzle in transitioning comfortably to life after work. And often, they are the subject of intense debate in divorce proceedings. In In re Marriage of Green, California’s Supreme Court considered what to do with retirement benefit credits made available based on service before the marriage, but paid for with community money.
Mr. Green began working as a firefighter in 1989 and married his wife, Ms. Green, roughly two years later. He continued to work for the Alameda County Fire Department over the course of the marriage and earned retirement benefits through the California Public Employees’ Retirement System (CalPERS). Mr. Green also exercised his option to purchase four additional years of service credit for retirement purposes based on his stint in the U.S. Air Force before joining the Department. Under this option, Mr. Green agreed to pay bi-monthly installments of $92 for 15 years.
The Greens separated in October 2007. At that point, Mr. Green had paid more than $11,400 in payroll deductions toward the additional retirement credit. The payments were scheduled to be completed in July 2017.
As the Supreme Court explained, the retirement benefits earned by Mr. Green during the marriage was community property to be shared equally between the spouses. The more difficult question, according to the court, was whether Ms. Green was also entitled to some of the value of the four years of additional retirement service credit purchased.
A trial court originally ruled that the military service credit was Mr. Green’s separate property. However, the lower court ordered him to pay Ms. Green half of the community money used to purchase the credit during the marriage, more than $6,600. An appeals court later reversed the decision, finding that the credit was community property because it was purchased with community money.
The Supreme Court sided with the trial court on further appeal, holding that the service credit was Mr. Green’s separate property that he earned through military service before he married Ms. Green. “Pension and retirement benefits are a form of employment compensation and thus tantamount to ‘earnings,'” the court explained. “As such, regardless of when the benefits “vest” or are received, they are characterized in accordance with the employee’s marital status at the time the services were rendered; i.e., the benefits are community property to the extent attributable to employment during marriage.”
Here, the court said the additional retirement credit was a direct result of Mr. Green’s military service, which occurred before the couple was married. Although the applicable state employee retirement benefits law treated the service as if it were firefighter service, that did not change the fact that it took place prior to the marriage, according to the court.
It should be noted that this final verdict was rendered roughly seven years after the couple originally separated. While the matter involved a complicated legal issue, some of the contentiousness associated with traditional divorce litigation – not to mention the long, drawn out nature of the process – can be avoided through alternatives like mediation and collaborative divorce. A person considering a divorce should seek the counsel of an experienced family law attorney in order to consider these and other options. With offices throughout the Bay Area, California divorce lawyer Lorna Jaynes provides innovative legal tools to resolve family law disputes without the bitterness and acrimony engendered by the adversarial process.
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