IN RE MARRIAGE OF GARCEAU v. Garceau

• Decision Date: 01 December 1999
• Docket Number: No. 98-3241.,98-3241.
• Citation: 2000 WI App 7,606 N.W.2d 268,232 Wis.2d 1
• Parties: IN RE the MARRIAGE OF: Jerry J. GARCEAU, Petitioner-Respondent, v. BRENDA S. GARCEAU, n/k/a Depies, Respondent-Appellant.
• Court: Wisconsin Court of Appeals

232 Wis.2d 1

2000 WI App 7

606 N.W.2d 268

IN RE the MARRIAGE OF:

Jerry J. GARCEAU, Petitioner-Respondent, v. BRENDA S. GARCEAU, n/k/a Depies, Respondent-Appellant.

No. 98-3241.

Court of Appeals of Wisconsin.

Oral argument October 22, 1999.

Decided December 1, 1999.

On behalf of the respondent-appellant, the cause was submitted on the briefs of and oral argument by Dawn M. Sabel of AA Sabel Law Office, S.C. of Fond du Lac.

On behalf of the petitioner-respondent, the cause was submitted on the brief of and oral argument by Bruce W. Elbert of Elbert, Pfitzinger & Byron of Juneau.

Before Brown, P.J., Nettesheim and Snyder, JJ.

¶ 1. BROWN, P.J.

The question presented is whether an insurance company's termination benefits package, a type of deferred compensation plan, should be divided at the time of divorce as part of the marital estate. Unlike a pension, the plan does not set money aside in a pool designated for the benefit of the particular employee. Rather, the amount of the termination benefit is based on the agent's performance during the twelve months prior to termination and the number of years the agent has been with the company at the time of termination. The trial court found that "[t]here is no way that an amount can be arrived at with any degree of accuracy" and thus excluded the termination benefits package from the property division. We realize that an estimate of these future benefits is by nature speculative. However, such is the case when dividing almost any retirement plan where future benefits are at issue. The termination benefits should have been included in the marital estate. We reverse that part of the judgment excluding the termination benefits package from the marital estate and remand with directions.

¶ 2. Brenda and Jerry Garceau divorced after fourteen years of marriage. During the marriage, Jerry obtained his insurance license and at the time of the divorce he had worked as an American Family Life Insurance agent for almost ten years. It is Brenda who appeals from the judgment of divorce, claiming that the court erred in its property division. We called for oral argument on what we see as the novel issue in this case: should Jerry's termination benefits be included in the marital estate, and, if so, how should they be divided? After setting forth our standard of review, we discuss the disposition of the termination benefits and then dispose of Brenda's other arguments.

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¶ 3. Valuation and division of the marital estate at divorce are within the discretion of the trial court. See Sharon v. Sharon, 178 Wis. 2d 481, 488, 504 N.W.2d 415, 418 (Ct. App. 1993). Thus, we will uphold the trial court's determinations on valuation and division as long as "the trial court examined the relevant facts, applied a proper standard of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach." Long v. Long, 196 Wis. 2d 691, 695, 539 N.W.2d 462, 464 (Ct. App. 1995). However, whether an asset is marital property subject to division under § 767.255, STATS., is a question of law we review de novo. See Lang v. Lang, 161 Wis. 2d 210, 217, 467 N.W.2d 772, 774 (1991).

¶ 4. Brenda first argues that it was error for the court to exclude Jerry's termination benefits plan from the marital estate. The plan determines Jerry's compensation when his relationship with American Family is terminated. When termination occurs, Jerry will receive extended earnings based on a percentage of renewal service fees earned during the twelve months prior to termination. The percentage varies with the number of years an agent is with American Family and the duration of payments depends on the agent's age at termination. An agent does not become eligible for extended earnings until he or she has been with American Family for ten years. As indicated above, the trial court found that any benefits Jerry might receive under the plan could not be calculated "with any degree of accuracy" and thus excluded the extended earnings from the marital estate. Brenda argues that this was error, as the extended earnings plan is akin to a pension and must, as a matter of law, be considered in the division of the marital estate. Jerry responds that case law pertaining to pensions has no application here, as his extended earnings are neither guaranteed nor able to be calculated at this time. He has no intention of terminating his relationship with American Family any time soon. Thus, what his renewal rate has been during the past twelve months (which is what Brenda's expert used to calculate the value of the extended earnings) does not, according to Jerry, predict what his renewals will be right before termination.

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¶ 5. As a threshold issue, we address the relevance of the fact that Jerry was not eligible for the plan until three days after the judgment of divorce was entered. Under Wisconsin law, pension benefits are to be taken into consideration when the marital estate is divided, whether they have vested or not. See § 767.255(3)(j), STATS. The date upon which a spouse becomes eligible to receive benefits is just one of many factors for the trial court to consider when deciding how to divide the marital estate. See Leighton v. Leighton, 81 Wis. 2d 620, 635, 261 N.W.2d 457, 464 (1978) (the trial court must "evaluate the probability that the party who has a contingent right to a pension will eventually enjoy that [right]") (quoted source omitted). At the date of divorce, Jerry's eligibility to receive benefits at termination was only three days away. As of the date of oral argument, Jerry was still an agent for American Family. Now, there is no question that he is eligible for termination benefits. Thus, while in some cases remote eligibility would be a factor the court could consider in dividing a future benefit, uncertainty about eventual eligibility was not and is not a relevant factor here.

¶ 6. For the same reasons consideration of a contingent interest is allowed, we reject Jerry's contention that the arguably speculative nature of the extended earnings bars their inclusion in the marital estate. In Leighton, our supreme court rejected a similar argument regarding unvested pension rights, stating that "the fact that the interest is contingent does not mean it may be ignored in property divisions in divorce actions." Id.; see also § 767.255(3)(j), STATS. (giving the trial court power to alter its equal division of property after considering several factors, including "pension benefits, vested or unvested, and future interests"). Section 767.255(3)(j)'s directive to consider both vested and unvested interests clearly rejects the idea that just because a future interest is contingent or speculative it should be excluded from the marital estate. As mentioned above, the uncertainty of actual receipt of retirement or termination benefits is a factor to be taken into account at their division. For example, in Peterson v. Peterson, 126 Wis. 2d 264, 376 N.W.2d 88 (Ct. App. 1985), we upheld the trial court's assignment of no value to a retirement plan where the plan would not vest for another twenty-plus years and the potential-beneficiary spouse was considering a new job due to the physically demanding nature of the work. See id. at 266, 376 N.W.2d at 89.

¶ 7. Unlike the situation in Peterson, there was no evidence here that Jerry intended or intends to quit American Family. And, while we acknowledge that the extended earnings are not a pension plan, they are American Family's way of providing for its agents when their careers are over. As future benefits, they are similar enough to a pension plan to be treated like one when dividing the marital estate. Jerry points out that "he will not be terminating his employment with American Family Insurance for many years and, therefore, will not be receiving any benefit." But this is almost always the case when dividing postemployment benefits of a young person. Eventually, Jerry will receive some termination benefits. It is up to the trial court to determine what share of the marital portion of these benefits should go to Brenda.

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¶ 8. Other jurisdictions are in accord that extended earnings plans should be included in the marital estate. For example, in Skaden v. Skaden, 566 P.2d 249 (Cal. 1977), the California Supreme Court was confronted with a termination package similar to the one in this case. While the Skaden package based the termination benefits on premium collections instead of renewals, the idea is the same: when the agent terminates, his or her benefits are based on the amount of account activity near the time of termination. The Skaden court likened the termination benefits to a pension plan and held that they "represent ... a divisible property interest." Id. at 249. Likewise, in Ray v. Ray, 916 S.W.2d 469, 470 (Tenn. Ct. App. 1995), the court held that even though the value of termination benefits depends in part on the employee spouse's postdivorce activities, "we choose not to adopt the conclusion that, for that reason, the [spouse] should be denied any interest whatsoever in such a substantial asset." See also Wade v. Wade, 923 S.W.2d 735 (Tex. App. 1996). We agree that termination benefits are part of the marital estate.¹

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¶ 9. Now that we have clarified that the extended earnings are a marital asset subject to division, we must turn to the complicated task of valuation and distribution. Valuation is within the discretion of the trial court. See Bloomer v. Bloomer, 84 Wis. 2d 124, 134, 267 N.W.2d 235, 240 (1978). However, the method of valuation must be logically sound. See id. at 132-34, 267 N.W.2d at 239-40 (rejecting present value discount when money being divided was not a projected future benefit). In Bloomer, our supreme court discussed valuation methods at length in order to guide trial courts in their exercise of discretion. See id. at 130-36, 267 N.W.2d at 238-41. Bloomer recognized three methods...