Marriage of Kraft, In re
| Decision Date | 23 July 1992 |
| Docket Number | No. 58247-5,58247-5 |
| Citation | 832 P.2d 871,119 Wn.2d 438 |
| Court | Washington Supreme Court |
| Parties | In re the MARRIAGE OF Donna L. KRAFT, Petitioner, and Bryce A. Kraft, Respondent. |
Chris A. Montgomery, Colville, for petitioner.
Salina, Sanger & Gauper, Allen M. Gauper, Spokane, for respondent.
The issue here presented is whether the trial court properly applied Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989) in its distribution of assets in the dissolution decree. We conclude the trial court improperly considered the husband's military disability retirement pay as an asset of the community. Accordingly, we affirm the Court of Appeals and reverse and remand to the trial court for reconsideration of the property distribution in accordance with this opinion.
Bryce and Donna Kraft were married on September 23, 1967. They have two children, Troy and Karen, who were 18 and 15 years of age, respectively, at the time their parents separated on March 20, 1988. Troy and Karen remained with Mrs. Kraft at the parties' Colville residence after the separation. Mr. Kraft moved into a hunting cabin without water, electricity, or telephone.
Mrs. Kraft has a master's degree in counseling. At the time of trial she was working as an alcohol and drug abuse counselor and earning approximately $1,700 net per month.
Mr. Kraft is a retired military officer, having a combined service of 21 years at the time of retirement. During a portion of his service, Mr. Kraft was in Viet Nam flying helicopters. He sustained injuries while serving in Viet Nam, including bullet wounds and hearing loss. The Veterans Administration (VA) rated Mr. Kraft as being 50 percent disabled. Besides his military background, Mr. Kraft has a Mr. Kraft's employment, as presented to the trial court, was as caretaker for an elderly man. In that capacity, he was earning at the time of trial approximately $1,000 per month. Because of the tenuous nature of this employment, the trial court found that Mr. Kraft's average net income from his caretaker job was $500 per month. Mr. Kraft also receives military benefits of $1,317 per month based on his 21 years in the service. He was married to Mrs. Kraft during 14 of those 21 years. The parties stipulated that one-half of Mr. Kraft's monthly military benefits represents disability pay.
bachelor's degree in elementary education and has a certificate to teach. He also has a master's degree in counseling
The trial court awarded to Mr. Kraft his individual retirement account (IRA) worth $9,000, a tractor worth $800, a 1976 Mercedes automobile worth $2,500, his tools worth $1,000, his guns worth $1,000, and various items not valued. As for the parties' debts, the court ordered Mr. Kraft to be responsible for repaying the VA for his disability overpayment, which the court estimated at approximately $21,000 when he began repaying it in 1987. The court also ordered Mr. Kraft to repay one-half of the parties' $3,500 debt to their son and one-half of their $1,200 debt to their daughter. The court ordered Mr. Kraft to pay $300 per month to Mrs. Kraft as child support for Karen until Karen reaches 18 years of age (which will occur in July 1992) and left open the question of post-majority support for Karen. The court also ordered Mr. Kraft to pay Troy $200 per month for 36 months in order to assist Troy with college expenses. The court conditioned these payments upon Troy's satisfactory academic performance.
The trial court awarded to Mrs. Kraft the following: the parties' house in Colville, valued at $126,000 and subject to a $60,000 mortgage; the parties' rental property in Alabama, valued at $55,000 and subject to a $16,000 mortgage; a 1979 Volvo automobile valued at $2,500; various The trial court, relying on expert testimony, determined that Mr. Kraft's total military pension had a present value of $247,553. The court awarded to Mr. Kraft one-half of the value of the total pension, or approximately $123,800, as his disability pay. The court determined that two-thirds of the remaining half (rounded to $82,600) was community property, based on the fact that the parties were married for 14 of the 21 years Mr. Kraft was in the service. Accordingly, the court awarded half of the community interest, or approximately $41,300, to Mrs. Kraft.
items of furniture and appliances worth $7,000; Mrs. Kraft's IRA worth $8,000; Mrs. Kraft's pension worth $3,000; woodworking tools worth $1,500; and various items not valued. The court ordered that Mrs. Kraft retain whatever rental income was left over from the Alabama property after the mortgage was paid (usually $200 per month). As her share of the debts, the trial court ordered Mrs. Kraft to pay the mortgages on the houses she was awarded, to repay a bank loan of $1,800, to pay the other half of the parties' debts to Troy and Karen, and to repay a $1,000 loan from her father
The trial court calculated that when the present values of the military benefits (disability and retirement) are added to the amounts awarded under the property distribution, and when the debts are deducted, Mr. Kraft would receive roughly $200,000 and Mrs. Kraft roughly $162,000.
The Court of Appeals held that the trial court erroneously treated Mr. Kraft's military disability pay as an asset subject to distribution, contrary to the United States Supreme Court's holding in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989). In re the Marriage of Kraft, 61 Wash.App. 45, 808 P.2d 1176 (1991). The Court of Appeals declared that when the disability pay is properly eliminated from the distribution equation, the result is a grossly disproportionate share of the parties' assets being awarded to Mrs. Kraft. 61 Wash.App. at 50, 808 P.2d 1176. Accordingly, the Court of Appeals reversed and remanded for redistribution of assets and recomputation of child and post-majority support. This court accepted Mrs. Kraft's petition for review.
The primary issue presented is whether the trial court improperly considered Mr. Kraft's military disability retirement pay in distributing the parties' assets given the Mansell holding.
Persons who serve in the military for an extended period, usually at least 20 years, are entitled to retirement pay. E.g., 10 U.S.C. § 3911 et seq. (1988) (Army); § 8911 et seq. (Air Force). Veterans are also entitled to disability benefits if they became disabled as a result of military service. 38 U.S.C. § 310 (1988) (wartime); § 331 (peacetime). A veteran may not receive both full retirement pay and disability pay, however. A retiree may receive disability benefits only to the extent that he or she waives a corresponding amount of military retirement pay. 38 U.S.C. § 3105 (1988). Such waivers are advantageous to retirees because disability benefits, unlike retirement pay, are exempt from federal, state, and local taxes. 38 U.S.C. § 3101(a) (1988).
In 1981, the United States Supreme Court held, in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), that federal law precluded a state court, upon the dissolution of a marriage, from dividing military retirement pay pursuant to state community property laws. Disability pay was not at issue. The Court reasoned that Congress intended military retirement pay to reach the veteran and no one else, and that therefore treating such pay as community property would do clear damage to important military personnel objectives. 453 U.S. at 232-35, 101 S.Ct. at 2741-43.
Congress responded to McCarty in 1982 by enacting the Uniformed Services Former Spouses' Protection Act (USFSPA), which authorizes state courts to treat "disposable retired or retainer pay" as community property subject to division upon dissolution of a marriage. 10 U.S.C. § 1408(c)(1) (1988). "Disposable retired or retainer pay" is defined in the USFSPA to exclude, inter alia, any amounts In Mansell v. Mansell, supra, the Court addressed the question whether state courts may treat, as property divisible upon divorce, military retirement pay waived by the retiree in order to receive veterans' disability benefits. The Court held that state courts may not do so. The Court drew this conclusion from the fact that the USFSPA grants state courts the authority to treat disposable retired pay as community property but specifically excludes retirement pay waived in order to receive disability pay. 490 U.S. at 589, 109 S.Ct. at 2028. See generally, Note, Mansell v. Mansell: How it Changed the Definition of Marital Property for the Military Spouse, 30 J.Fam.L. 97 (1991).
waived in order to receive disability benefits. 10 U.S.C. § 1408(a)(4)(B) (1988).
In order to assess Mansell properly, we must contemporaneously consider RCW 26.09.080, which provides that in a dissolution proceeding the court must dispose of the parties' property in a "just and equitable" manner after considering, inter alia, "[t]he economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to a spouse with whom the children reside the majority of the time." Thus, Mansell requires the trial court not to treat military disability retirement pay as divisible, whereas RCW 26.09.080 requires the trial court to make an equitable distribution in light of the parties' post-dissolution economic circumstances. The question then becomes how the trial court is to honor both these requirements.
Guidance is provided by a number of state court decisions. For example, in Rothwell v. Rothwell, 775 S.W.2d 888, 891 (Tex.Ct.App.1989), the veteran claimed that the trial court erred in awarding a disproportionate share of the marital home to his ex-wife. In upholding the property distribution, the Texas Court of Appeals rejected this argument and declared that "the trial court could consider...
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