Rolfe v. Rolfe, 88-223
| Decision Date | 14 October 1988 |
| Docket Number | No. 88-223,88-223 |
| Citation | 234 Mont. 294,766 P.2d 223 |
| Parties | In re The Marriage of Beverly C. ROLFE, Respondent and Petitioner, v. Oliver W. ROLFE, Appellant and Respondent. |
| Court | Montana Supreme Court |
Fred Thomson, Missoula, for appellant and respondent.
Rebecca Summerville, Datsopoulos, MacDonald & Lind, Missoula, for respondent and petitioner.
This is an appeal from the Fourth Judicial District Court, Missoula County, Montana. Appellant Oliver Rolfe appeals the District Court's denial of an award of child support from the respondent and its valuation of his retirement benefits. We affirm on both issues.
This case is presented to us after remand with instructions on the property distribution. See, Rolfe v. Rolfe (Mont.1985), 699 P.2d 79, 42 St.Rep. 623. While our remand instructions focused on a number of inequities in the property division, the present appeal concerns only the proper valuation of Oliver Rolfe's retirement benefits. A brief set of facts will be discussed in this opinion.
Beverly Rolfe (hereinafter wife) and Oliver Rolfe (hereinafter husband) were married in 1968 and divorced in 1983. They have two sons, Jonathan and Alexander. Sole custody of the children was awarded to husband, with supervised visitation for wife. The husband has a Ph.D. in Romance Linguistics and is a tenured professor at the University of Montana. Husband has been employed with the Montana University System since 1971, and in conjunction with his employment, contributes to the Montana Teachers' Retirement System. Husband, at the time of the dissolution, had an average yearly salary of $28,484.
Wife was a homemaker throughout the marriage. She has a B.A. in Education and taught for several years prior to the marriage. On remand, the District Court found that although wife could acquire the necessary quarter credits to gain a teaching certificate, the surplus of elementary school teachers in Missoula and keen competition for available jobs made such employment problematic. In wife's current job as a medical transcriptionist she earns approximately $11,000 annually. The maximum wage available in the field is approximately $15,288 annually. In addition, wife would like to gain employment in the legal secretarial field. Because of the limited teaching positions in Missoula, the greater opportunities in the legal secretarial and medical transcriptionist fields and insignificant wage differences, the District Court found wife's plan for training and employment reasonable.
On remand, the District Court heard substantial evidence from experts regarding the proper valuation of the retirement benefits, as per our instructions. From this evidence, the lower court made extensive findings, concluding the retirement benefits should be divided according to a formula, as they are received.
The husband raises two issues on appeal. First, husband attacks the pension valuation, asserting the trial court impermissibly included non-marital assets in the valuation. Second, husband argues the lower court erred in refusing to award child support to be paid by wife.
Issue No. 1: Pension Valuation
The husband's first issue focuses on the proper valuation for retirement benefits. It is well established in this state that retirement benefits are a part of the marital estate, Karr v. Karr (Mont.1981), 628 P.2d 267, 38 St.Rep. 506. The question is what value to assign to the pension for proper division of the marital asset. While we attempted to give instructions in our previous decision, we recognize such assets contain numerous contingencies, thereby avoiding categorical formulas.
To begin our decision, an in depth review of the specific retirement plan is in order. The Montana Teachers' Retirement System (hereinafter MTRS) plan provides for both employee and employer contributions, 7.044% and 7.428% respectively, based upon the rate of salary earned each month. The plan benefits become a vested right after five years of full-time service in Montana for which contributions have been made. Benefits are computed according to a formula:
Annual Creditable Service Average
------------------
Benefit = 60 X Final
Compensation
The annual retirement benefit is paid in twelve equal monthly installments. The average final compensation value is the highest average of earned compensation during three consecutive years of full-time service.
Once an employee ceases teaching in Montana, he may apply for benefits. Benefits are payable in full after 25 years of service, regardless of age. However, an employee with less than 25 years of service can retire as early as age 50, at a reduced benefit. The normal retirement age is 60. The reduction is .5% for each of the first 60 months the retirement date precedes age 60 or 25 years of service, and .3% for each additional month. At trial, experts testified Dr. Rolfe's benefits would be reduced 37.2% if he were to retire at age 50. In addition, the MTRS plan does not provide for lump sum distribution of benefits prior to age 50. An employee may, however, obtain a refund of employee contributions upon withdrawal from the plan.
Generally, the proper test for determining the value of a pension is the present value. In re Marriage of Bowman (Mont.1987), 734 P.2d 197, 203, 44 St.Rep. 488, 494. Given the various contingencies, however, present value may not be adequate to value the asset. For instance, our earlier decision instructed the District Court to not only consider the amount of husband's contributions, but also to consider nonvested pension benefits in the form of employer's future contributions. Rolfe, 699 P.2d at 83. These nonvested amounts are analogous to deferred compensation which the husband earned during the marriage. In re Marriage of Pryor (Mont.1986), 731 P.2d 895, 898, 43 St.Rep. 2358, 2361. The employer's future contributions, like husband's contributions, are a factor of monthly salary, an amount which could not accurately be determined. In addition, the plan's reduced benefit formulation varies significantly with the individual. Numerous other contingencies associated with retirement benefits, including early retirement or disability, are equally elusive of accurate calculation.
Rather than attempt to project each individual contingency, the District Court developed a formula to divide the pension benefits:
Years of Service
During Marriage X Monthly Benefit X 1/2
----------------
Years of Total (after taxes)
Service
The division of retirement benefits upon receipt is commonly known as the "time rule" and was mentioned in our earlier decision via citation to In re Marriage of Brown (Cal.1976), 544 P.2d 561. See, Rolfe, 699 P.2d at 83. Under this method, the marital interest is represented by a fraction, the numerator of which is the length of the employee's service during the marriage, and the denominator is the employee's total length of service. This fraction is then applied to each benefit payment, lump or periodic, to determine the portion earned during the marriage. Although the extent of the marital interest is determined as of the date of the dissolution, the benefit factors to be applied to the pension credits earned during the marriage are those in effect at retirement. Thus, the non-employee spouse is entitled to increases or accruals on her interest because of the delay in receiving those payments. McNamara, Dividing Pension Benefits Upon Divorce, ALI-ABA Course Materials Journal, No. 2, 33, 42 (1983).
Husband argues this formula impermissibly includes non-marital property in the form of future employee contributions, and does not finally apportion the marital estate. Husband would urge this Court to value the pension as of the date of dissolution, yet suspend payment until he retires. This position is flawed in three respects. First, the monthly pension benefit is not determined by the amount of contributions, but instead by the highest average salary earned over three consecutive years. Therefore, the only amounts which could arguably be called post-marital property are possible salary increases received prior to retirement. As the husband's expert testified at trial, Dr. Rolfe historically received a 3% increase each year. The trial court expressly excluded any amounts unique to husband, such as merit pay raises. Second, each party is well aware of their respective percentage of pension benefits: the fraction represents the marital interest. Third, to value payments now, without also demanding an immediate cash payment to wife, would result in an unfair windfall to husband. Wife could easily earn over 3% were she able to invest the money immediately. Certainly husband recognizes the inequity in a delay without corresponding interest.
Husband also claims the order effectively binds him to continued employment with the University, and in turn, MTRS plan. This Court fails to see the basis of husband's argument. On the...
To continue reading
Request your trial
-
Marriage of Hunt, In re
... ... Lynch, 665 S.W.2d 20, 23-24 (Mo.Ct.App.1983); Rolfe v. Rolfe, 234 Mont. 294, 766 P.2d 223, 226 (1988); Gemma v. Gemma, 105 Nev. 458, 778 P.2d 429, ... ...
- In re Elder
-
In re Marriage of George
...Valuing the deferred compensation plan at its post-taxation value, using the date of separation valuation, applying the court's formula from Rolfe II with a of 11 to Mike's two-part pension plan, and subtracting all liabilities from Mike's portion of the estate ($1,466,214), the District Co......
-
In re George
...at trial that Chelsey should receive a portion of Mike's two-part pension plan divided in accordance with In re Marriage of Rolfe , 234 Mont. 294, 298-99, 766 P.2d 223, 226-27 (1988) (" Rolfe II "), where the court determined the marital interest of the ex-husband's retirement benefits by d......
-
§ 7.10 Pensions
...McCown v. McCown, 634 So.2d 1249 (La. App. 1994); Webber v. Berry, 609 So.2d 1175, 1178 n.2 (La. App. 1992). Montana: Rolfe v. Rolfe, 234 Mont. 294, 766 P.2d 223 (1988) (the value of the marital claim was to be computed at retirement, ignoring any post-divorce merit pay increases). Nevada: ......
-
§ 3.03 Equitable Distribution Systems
...v. Daniels, 557 S.W.2d 702 (Mo. App. 1977). Montana: In re Marriage of Castor, 249 Mont. 495, 817 P.2d 665 (1991); Rolfe v. Rolfe, 234 Mont. 294, 766 P.2d 223 (1988); In re Marriage of Hull, 219 Mont. 480, 712 P.2d 1317 (Mont. 1986). Nebraska: Hoshor v. Hoshor, 254 Neb. 743, 580 N.W.2d 516 ......
-
Ethical Issues for Guardians Ad Litem Representing Children in Dependency and Neglect Cases
...supra. 10. In the Interest of J.P.B., 419 N.W.2d 387, 391-92 (Iowa 1988); In re Marriage of Rolfe, 699 P.2d 79, 86-87 (Mont. 1985), aff'd 766 P.2d 223 (Mont. 11#. CRS § 14-10-116(1). For CJDs, see note 7, supra. 1#2. CRS § 14-10-116(2)(a). 13. Legal Representatives actively litigate best in......