Brian Mork [Rev 1.3]
"We reject this proposition as presented because it limits plaintiff's interest as if the pension were awarded at the time of divorce, rather than deferred for almost twenty years. We have disapproved of "the mixture of two separate and distinct evaluation and distribution methods by valuing the pension in present-day dollars and then delaying distribution to a date...in the future. [The proposed method] calculate[s] the spouse's share based on present value, and defer distribution until the pension is received. Such an approach is indefensible." (italics added)The premise asserted in the italicized part is factually incorrect. The third sentence is also factually incorrect. The court was wrong to assess this as a concern of present-value and future-value dollars. The two pages following the above quote in their opinion become irrelevant discussion because they are based on a faulty factual assertion. Once the factual mistake was made, judicial arguments took them down the incorrect path. They claim this method does "...valuing in present-day dollars and then delaying distribution to a date in the future." This is false, in contradiction to many Federal government accountants that looked at dual coverture methods before publishing the Dept Defense report to Congress and Senate Armed Services Committees. The Appellate Court misunderstood, and based on factual inaccuracy, made a faulty judicial decision. The method proposed by the Defendant does give time-value of money to the non-military spouse for all the intervening years between valuing and distribution, and it does give calculable precision. Using Dual Coverture, both parties will get increases each year when the military pay charts reflect increases in military pay.
"When a claim is made to exclude post-dissolution sums, the employee-spouse seeking exclusion bears the burden of proving with calculable precision what portion of the increase in the pension's value is immune from equitable distribution."It's not clear why the burden of proof would exist to prove that post-marital earnings are not part of a marriage. Shouldn't the burden of proof be on the person trying to take them even though the marriage was dissolved? For example, earnings deposited into a 401(k) after marriage, for example, are presumed to belong to only the earner.
"We apply retired pay COLAs to the hypothetical retired pay amount up to the member’s actual retirement date to find a “present value” of the hypothetical retired pay as of the member’s actual retirement date."In fact, DFAS was so concerned that this would appear biased against the military member, that they felt the need to clarify:
This adjustment does not result in the former spouse benefiting from the member’s additional service time or promotions after the hypothetical retirement date. It simply provides the former spouse with the amount he or she would have received had the member actually become eligible to receive retired pay on the hypothetical retirement date.Notice the last two sentences mitigate the concern that it's biased because it sounds too generous to the non-military member! There is no way to read this quote and claim, as the NJ Appellate Court did, that present value or time-value of money (in the form of COLA) was being withheld from the non-military spouse.
"Congress should amend the USFSPA [laws] to provide that all awards of military retired pay be based on the member’s rank and years of service at the time of divorce. This provision should be exclusively prospective. For example, if a future divorce occurs when the member is an O-4 (i.e., Major/Lieutenant Commander) with 14 years of creditable service, the award of military retired pay must be based on that rank and time served. That the member retires as an O-6 (i.e, Colonel/Captain) with 24 years of service is irrelevant to the award of military retired pay as property.I would again emphasize that the only way to do what is written in the quote above with a formula in a court order is the Hypothetical Method or a Dual Coverture method, and the Dual Coverture Method is much simpler and better for both parties. This Federally authoritative passage directly opposes the NJ Appellate Court claim of fact, with a specific example almost identical to the NJ case. It must be that the Appellate Court judicial panel didn't read this document or were horrendously biased against the military member.
"The pay increase attributable to the promotions and additional time served should be viewed as the member’s separate property. [emphasis mine] However, as a matter of equity, the former spouse should benefit from increases in the pay table applicable to the O-4 grade. Thus, as the pay for an O-4 with 14 years of service is increased due to increases in the pay table, so too is the value of the allocation to the former spouse. The objective in this regard should be to provide the former spouse, on a present value basis, with approximately the same amount of retired pay that he or she would have actually received had payments begun on divorce. DFAS should include a formula in its recommendations that could be used by parties who divorce while the member is still on active duty.
retention bonus was not earned during the marriage; thus, no portion of
the retention bonus was marital property. Plaintiff had not yet earned
the $ 180,000 retention bonus at the time of the parties' divorce. It
is undisputed that plaintiff was required to work until May 31, 2009 in
order to receive the [***7] $ 180,000 bonus. Although two installation
payments were made during the marriage, plaintiff had not earned that
money when it was disbursed because he had not satisfied the condition
subsequent (i.e., remain employed until May 31, 2009) required by the
agreement between him and his employer. If plaintiff had not remained
employed by Ford until May 31, 2009, plaintiff would have been required
to repay the installments he had previously received. Consequently,
plaintiff did not earn the retention bonus until May 31, 2009, which
occurred after the judgment of divorce was entered even though part of
it had been advanced to him. Unlike in Byington
where the compensation package was earned before the entry of the
judgment of divorce, no portion of plaintiff's retention bonus was
earned during the marriage. The trial court erred when it determined
that any portion of the retention bonus was marital property.
[*584] Furthermore, the trial court erred when it concluded that the third payment was separate property subject to invasion. A party's separate estate is the property the party generally takes away from the marriage separate from the marital assets, Reeves, supra at 494. However, [**372] plaintiff [***8] did not take his retention bonus away from the marriage because he had yet to earn it. Therefore, the third installment of the retention bonus should not have been considered as separate property, and, as a result, was not subject to division by the trial court at all. We reverse the trial court's award of any portion of the retention bonus to defendant.
promotion enhancement and early payments (PEEP) retention bonuses were
not earned during the marriage; thus, no portion of the PEEP was
marital property. Member had not yet earned the PEEP at the time of the
parties’ divorce. It is undisputed that the plaintiff was
required to work for 3 years past attaining new rank and for duty past
January 28th, 2008 in order to receive PEEP. No payments were
made during the marriage and military member had not earned the money
because the necessary work earning PEEP was not satisfied until years
later. If military member had not continued duty with the Air Force,
military member would not have received any PEEP. Plaintiff did
not earn PEEP until years after the divorce was finalized. Unlike
in Byington where the
compensation package was earned before entry of the judgement of
divorce, no portion of the military member’s PEEP was earned during the
marriage, and the divisible retirement value (amounts and dates of
payment) that were earned during the marriage are in no way reduced or
burdened by using them to calculate the separate property value. The
trial court erred when it determined that any portion of the PEEP was
Furthermore, the trial court erred when it conclude that PEEP was separate property subject to invasion. A party’s separate estate is the property the party generally takes away from the marriage separate from the marital assets. However, military member did not take his PEEP retention bonus away from the marriage because he had yet to earn it. Therefore, PEEP retention bonus should not have been considered as separate property, and, as a result, was not subject to division by the trial court at all. We reverse the trial court's award of any portion of the retention bonus to ex-spouse.
||Disability may not
be divided. Prohibits circumvention by awarding an “offsetting award”.
If member waives retirement to get disability, then waived retirement
portion is NOT divisible.
spouse is permitted to share in increases in retirement due to
post-separation efforts which were built on the foundation of marital
effort”. The court was talking about passive financial interest amounts
on the value of a retirement, which was dated at the time of divorce
rather than the time of receiving the award. Be careful to not cite
this regarding enhancements due to active effort such as promotions or
additional duty, which are easily, numerically, separable.
finalized Judgement of Divorce that said agreed “50% of pension” after
party appealed 7 years later. However, this is differen than an order
requiring “50% of pension earned during the marriage”.
Re-interpreting what is a marital asset (years) was forbidden.
“hypothetical method” (prorate with TWO coverture fractions of time,
and rank promotions) implicit. Only debate in this case was about
fixed-dollar (old chart with no COLA), or fixed-rank (which gives COLA
because military officers get raises each year). Indiana Overholtzer
case argues that COLA was NOT part of the divided asset, so military
member retains it all (not divided).
as income, not as divisible asset. Appeal court decides against “he
keeps funds he contributed to” and “she keeps funds she contributed to”.
||“built on prior
years” or “on a foundation of prior years” is NOT sufficient cause to
divide a promotion portions of a pension. Application: Reserve early
retirement payements before age 60 are dependent on separate, distinct,
periods of duty that are not dependent on married time in any way –
it's just as if they and the resultant retirement benefit were a
||In order to do
60:40 split, non-pensioner IS given time-based coverture fraction of
promotions earned post-divorce,
ONLY because of the intended 60:40 split. A non-50:50 bias is an argument why most cases should NOT divice post-divorce promotions.
additional retirement/retainer benefit which accrues to [retiree] as a
result of his continued active service with the United States Air
Force, such as increases in military rank, increased time in service,
and annual adjustments authorized for active duty personnel, shall be
the sole and separate property of [retiree] and shall not be subject to
any interest of [spouse] and shall not be included in the calculation.”
They even give all COLA to only the military member.
wasn't part of original property at time of divorce is in error.
with promotions after divorce and Reserve early retirement (?),
favorable to military member.
“Valuation at the time of divorce” says promotion benefits go only to
retiree. After USFSPA, does court still need to set an evaluation
date and adjudicate what part of military pension was marital property?