Duncan v. Duncan, 85-CA-607-MR

• Decision Date: 13 February 1987
• Docket Number: No. 85-CA-607-MR,85-CA-607-MR
• Citation: 724 S.W.2d 231
• Parties: Marion Scott DUNCAN, Appellant, v. Ann L. DUNCAN, Appellee.
• Court: Kentucky Court of Appeals

Page 231

724 S.W.2d 231

Marion Scott DUNCAN, Appellant, v. Ann L. DUNCAN, Appellee.

No. 85-CA-607-MR

Court of Appeals of Kentucky.

Feb. 13, 1987.

Charles W. Curry, Curry & Guthrie, Lexington, for appellant.

Natalie S. Wilson, Carol Davis Hendricks, Gess Mattingly Saunier & Atchison, Lexington, for appellee.

Before WILHOIT, COOPER and DUNN, JJ.

DUNN, Judge.

The Fayette Circuit Court made an equal division of the marital property in the parties' dissolution decree and in so doing valued the husband's interest in the Federal Civil Service Retirement pension fund at $25,183, the face value of his contributions to it, without discounting it to $9,100, the present discounted value of his contributions. He maintains that the trial court in so doing abused its discretion because he did not have access to the funds and appeals. We disagree with the husband and, hence, affirm.

The trial court made its equal distribution of the marital property based on net value. The wife was awarded the following with net values as indicated for a total of $63,059: household goods and silver in her possession $5,897, 1984 Renault automobile $500, her IRA $4,186, Ohio National Life Insurance policy $870, her savings account Bank of Lexington $168, her checking account $200, marital home $51,238. The husband was awarded the following with net values as indicated totaling $57,757: Certificate of Deposit $15,000, household goods and silver in his possession $1,404, 1982 Mercury Marquis automobile $6,900, his IRA account $4,204, 1983 tax refund $757, Mass. Mutual Life policy $3,007, 1966 Fairlane automobile $1,100, antique book case of questionable value, his checking account $212, and the Federal Civil Service Retirement pension fund in question $25,183. In order to equalize the distribution between them on a 50/50 basis the trial court provided that the wife pay to the husband the sum of $2,656, resulting in each receiving marital property, the net value of which amounts to $60,403. It also provided for maintenance for the wife and support for their children. Again, none of this is in dispute except the treatment of the pension fund.

A brief description of the husband's pension plan is appropriate to this opinion. He is a federal bank examiner and has participated in the Federal Civil Service Retirement system for 15 1/2 years. His rights in the pension plan can properly be described as vested, but not matured. As such it is marital property. Foster v. Foster, Ky.App., 589 S.W.2d 223 (1979). Pursuant to KRS 403.190 it is to be fairly disposed of by the trial court. Light v. Light, Ky.App., 599 S.W.2d 476 (1980).

The nature of the plan is quite simple. The husband contributes 7% of his net salary to it. At any time his contribution can be determined by reference to his current pay voucher or by direct inquiry. Once it is vested there is no provision for forfeiture of his contributions to it. If he remains in the program to normal retirement age or disability, he will be entitled to continuous monthly payments, the total of which in no event will be less than the amount of his contributions. If he dies or terminates his employment before retirement or dies shortly after retirement age, he is entitled to have his contributions returned. On the other hand if he retires at the normal age or because of earlier disability, his retirement benefits extend for his lifetime and could, and in all probability would, substantially exceed the total value of his contributions. To speak practically, under the plan he could not withdraw the money he contributed without resigning or dying. In essence at the time of the dissolution his interest in the retirement plan was vested but had not matured to pay status. Owens v. Owens, Ky.App., 672 S.W.2d 67 (1984).

In a plan such as we have here there are basically two methods in which the non-employee spouse can be awarded his or her interest in the employee spouse's pension benefit. The first we call the "present value method" in which the trial court measures the present value interest in the pension and awards a percentage of that amount to the non-employee spouse in a lump sum, usually in the form of equivalent property. The employee spouse thus receives the entire pension right free of the non-employee's interest therein. Obviously this method requires the presence of other assets in an amount sufficiently significant both in amount and value so that other assets of an appreciable quality and quantity could be awarded to the employee spouse in addition to the pension fund to equalize division of the parties marital property. Obviously it would be an abuse of discretion only to award the employee spouse the unmatured pension fund rights and offset its value by awarding all other marital property to the non-employee spouse. The other method we call the "delayed division method", measures the formula for division at the time of the decree but delays the actual division until payments are received awarding to the respective parties the appropriate formula percentage of each pension payment if, as and when it is paid out. The "present value method" utilized by the trial court in the instant case provides advantages over the "delayed division method" especially where, as here, the anticipated date of retirement is far in the future and the parties both agree to it. The former spouses are thus spared further entanglement because the litigation is completed and the problems of enforcement are avoided.

In using it, however, the trial court is confronted with the complex problem of valuing the employee pension rights at the time of the decree. Obviously...