Boyd v. Boyd, Docket No. 55268

• Decision Date: 01 September 1982
• Docket Number: Docket No. 55268
• Citation: 116 Mich.App. 774,323 N.W.2d 553
• Parties: Duane Howard BOYD, Plaintiff-Appellee, v. Kathleen BOYD, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 553

323 N.W.2d 553

116 Mich.App. 774

Duane Howard BOYD, Plaintiff-Appellee, v. Kathleen BOYD, Defendant-Appellant.

Docket No. 55268.

Court of Appeals of Michigan.

Submitted Jan. 5, 1982.

Decided June 8, 1982.

Released for Publication Sept. 1, 1982.

Fry, Barker & Hayne, Hillsdale, for plaintiff-appellee.

Thomas E. Anderson, Jackson, for defendant-appellant.

Before CAVANAGH, P. J., and BRONSON and BEASLEY, JJ.

BRONSON, Judge.

The parties were divorced by a judgment entered on December 3, 1980, in the Hillsdale County Circuit Court. Defendant appeals as of right, contesting the propriety of the property disposition, child support, and alimony award.

At the time of the divorce, plaintiff was 55 years old and employed by Clark Equipment Company (hereinafter Clark Equipment). The parties' tax returns for the years 1978 and 1979 reveal that in each year plaintiff earned a gross salary of approximately $28,000. Defendant was 51 years of age at the time of the divorce and unemployed. Defendant worked only sporadically during the marriage while plaintiff had been employed by Clark Equipment for some 24 years. The parties were married for over 30 years and had two minor children at the time of trial.

The trial court awarded plaintiff property with a value of $37,206. Defendant was awarded property with a value of $30,687. Plaintiff was ordered to pay defendant $3,259.50, which represented one-half the difference of the value of the property awarded plaintiff in excess of that awarded defendant. A subpay plan at Clark Equipment was valued at $4,000. Plaintiff was ordered to pay defendant an additional $2,000 as her share of the plan.

Child support was set at $45 per week, per child, until each child attained his majority. On December 4, 1980, one of the children, Charles, turned 18. On May 6, 1982, Steven, the parties' remaining minor child, reached 18 years of age.

The court awarded defendant $60.00 a week in alimony until May 6, 1982. On this date, plaintiff's alimony obligation expired. The court also ordered plaintiff to pay defendant as additional alimony $1,000 per year for the years 1981 and 1982. Each payment was to be made in a lump sum before the start of the calendar year for which it was intended.

Defendant first contends that the circuit court erred in failing to consider as a marital asset plaintiff's noncontributory pension plan with Clark Equipment. In Miller v. Miller, 83 Mich.App. 672, 269 N.W.2d 264 (1978), this Court held that a noncontributory pension plan is distributable as a marital asset to the extent that the plan has a reasonably ascertainable present value and the employee's interest is more than a mere expectancy. See, also, Tigner v. Tigner, 90 Mich.App. 787, 282 N.W.2d 481 (1979).

In the case at bar, the court noted that although defendant had a current right to a pension, he was not yet eligible to receive anything from the company. At the earliest, plaintiff would be able to receive monies from the pension plan at age 59. In any case, upon his death, unless he was married and elected a "joint and survivor benefit", he would be eligible for no further payments. ¹

In Gibbons v. Gibbons, 105 Mich.App. 400, 306 N.W.2d 528 (1981), we held that an employee's vested, but unmatured, pension rights were distributable as a marital asset. In considering the Miller holding, the Gibbons Court concluded that the possibility that one might die prior to the completion of his expected lifespan is not the type of contingency which should defeat the distribution of pension benefits upon marital dissolution. This case differs from Gibbons only in that here, at the time of the divorce, the pension holder was not eligible to receive benefits if he chose to retire immediately. As in the instant case, Gibbons involved a pension plan which terminated on the death of the pension holder.

In Gibbons, we stated that the statutory mortality tables appearing in M.C.L. Sec. 500.834; M.S.A. Sec. 24.1834 could be used to calculate life expectancy for purposes of determining the value of a pension plan. The value calculated in this way could in turn be reduced to a present value for purposes of computing each party's interest in the pension benefits. Id., 403, 306 N.W.2d 528. Essentially, the same procedure can be utilized to determine the value of the pension plan here. Since, however, plaintiff was 55 years old at the time of the divorce and was not eligible to receive any pension benefits until at least age 59, the following deviation from the Gibbons calculation would be necessary. First, the lower court would have to ascertain the likelihood of a 55-year-old man dying before he becomes 59. If, for instance, five 55-year-old males out of each 100 die by the age of 59, the value of the pension benefits would have to be reduced by 5%. Second, the life expectancy of plaintiff at retirement age would have to be calculated. By M.C.L. Sec. 500.834; M.S.A. Sec. 24.1834, a 59-year-old person has a life expectancy of 16.81 years. ² Third, the life expectancy of plaintiff would have to be multiplied by the yearly pension benefits the plan provides. Fourth, this figure must be reduced by the percentage of possibility that plaintiff would die before he is eligible for retirement. (In this example, we have used 5% for purposes of illustration only.) Fifth, this figure must be reduced to present value. This sum will constitute a reasonably ascertainable present value for the pension.

The major objection to the division of a vested, but unmatured, pension plan in the way that we have outlined is that the pension holding spouse may not ever receive anything from the pension plan yet, nonetheless, have to pay the nonpension holding spouse for an interest in the plan. This is, of course, a matter for legitimate concern. However, to the extent that a pension plan of the variety under consideration here is deemed a marital asset, the real problem is determining which party on the marriage's dissolution may have to be shorted in the distribution of assets. If, because of the relatively small possibility that the pension holding party might not actually benefit from the plan, we were to hold such pensions nondistributable, we would actually be perpetrating a greater inequity. Our refusal to distribute the pension benefits would result in the pension holding spouse obtaining more than a fair share of the marital assets in most cases since, in actuality, most persons do live approximately to the fulfillment of their expected lifespan. Indeed, even under the method of distribution outlined in this opinion, a pension holding spouse who lives significantly longer than his or her expected lifespan will obtain a disproportionately higher share of the marital assets. Under the holding of this opinion some inequities will probably result. However, the contrary holding will inevitably result in even greater inequities in a greater number of cases.

We proceed from the premise that it is unrealistic to think of an employee's pension plan as a gratuity or mere largesse from the employer. Such pension plans must be deemed bargained-for consideration in lieu of more salary now. If, instead of a pension plan, the employer offered higher wages, these monies would have been available to the parties during the marriage and, to the extent that this compensation in lieu of a pension had been invested, may well have resulted in a bigger pot of marital assets for distribution. ³ By finding that a particular pension plan is a marital asset, a court is finding that both parties have a right as between themselves to benefit from the same.

Two of us were on the panel that decided Miller, supra. We now believe that the following statement from Miller is too broad:

"If the employee's interest is contingent or a mere expectancy it may not be distributed pursuant to a divorce judgment." Id., 675, 269 N.W.2d 264.

It is our opinion that any vested pension which is deemed a marital asset should be distributed even if the plan is subject to the contingency or expectancy that the employee survive to a certain age or a specific number of years. Moreover, there may be potential pension benefits which, although not vested at the time of divorce, should be considered marital assets. For instance, if an employee's company has a pension plan which results in a vested pension after 25 years of service, the employee has worked 24 years, and there is no or very little chance that the employee will be laid off before the plan vests, we believe that anticipated benefits from the plan should be distributable to the extent the lower court concludes the plan is a marital asset. ⁴

We have discussed the distribution of potential pension benefits as if they must be reduced to present value and distributed immediately. In fact, this is only one possible means of distribution. In Chisnell v. Chisnell, 82 Mich.App. 699, 267 N.W.2d 155 (1978), lv. den. 403 Mich. 844 (1978), cert. den. 442 U.S. 940, 99 S.Ct. 2881, 61 L.Ed.2d 310 (1979), reh. den. 444 U.S. 887, 100 S.Ct. 187, 62 L.Ed.2d 121 (1979), this Court affirmed a distribution of pension benefits as they were received by the pension holding spouse. This method of distribution would be particularly useful in cases such as this one, where the lifespan of the pension holding spouse determines the actual value of the pension benefits. This method of distribution would eliminate the inequity of a pension holding employee "buying out" his spouse's pension interest and dying without ever receiving anything. It would also eliminate the possibility of the pension holding employee's interests in the pension being far more valuable than would be expected based upon life expectancy, so that the non-pension holding spouse would be shorted.

In this case, the court could defer distribution of any pension benefits until plaintiff begins to receive them. Such payments would resemble alimony, but would be considered the...