Webster v. Webster
| Decision Date | 16 June 2006 |
| Docket Number | No. S-05-372.,S-05-372. |
| Citation | 716 N.W.2d 47,271 Neb. 788 |
| Parties | Leonard L. WEBSTER, Appellant v. Susan K. WEBSTER, Appellee. |
| Court | Nebraska Supreme Court |
John A. Kinney, of Govier, Milone & Kinney, L.L.P., Omaha, for appellant.
Karen A. Bates-Crouch, and, on brief, Kimberly A. Booth, of Bates-Crouch Law Office, P.C., L.L.O., Omaha, for appellee.
This case presents an appeal from the decree of dissolution dividing the parties' marital property, including pension and retirement benefits. The issues presented are (1) whether the disparate timing of the parties' retirement must be considered in the distribution and (2) whether a party who participated in a public employee retirement fund "in lieu of" Social Security participation is entitled to an offset or other compensation for a spouse's Social Security benefits.
Leonard L. Webster and Susan K. Webster were married on July 30, 1983. On September 25, 2003, Leonard petitioned for dissolution. The marriage was dissolved by a decree filed March 14, 2005. The trial court did not award alimony and set forth an equal distribution of marital assets. With regard to pension and retirement plans, the court awarded 50 percent of the marital portion of Susan's employee retirement trust fund to Leonard, pursuant to a qualified domestic relations order, to be entered at a date separate from the decree and incorporated at that time. It similarly awarded 50 percent of the marital portion of Leonard's employee retirement plan to Susan, pursuant to a qualified domestic relations order, to be entered at a date separate from the decree and incorporated at that time. The court set forth that the parties had "stipulate[d]" that the "`marital portion'" of each pension should be determined using a coverture fraction, and each party should be entitled to 50 percent of the other parties' pension benefit, multiplied by a fraction, the numerator of which was the number of months of marital service (employment/service during the marriage) and the denominator of which was the total months of service/employment.
Leonard had begun working for the Omaha Public Power District (OPPD) on November 10, 1969. He worked there until his voluntary retirement on April 1, 2004, at the age of 54, which was during the pendency of the dissolution proceedings. There is no evidence that Leonard retired because of any disability or hindrance to his ability to work. The evidence presented at trial showed that Leonard received a monthly pension distribution of $3,728.75 before taxes.
Leonard testified that he did not contribute to Social Security during his employment with OPPD. No evidence was presented as to the amount of Social Security payments to which Leonard personally would have been entitled had he been entitled to receive Social Security. Susan was still working, and there was no evidence attempting to calculate either her expected Social Security benefit or Leonard's spousal share of such benefit under the Social Security Act.
Susan began working for the Douglas County treasurer on February 9, 1981, where she remains employed, with no current plans to retire. She regularly contributed to Social Security, but evidence was not presented as to the future value of any Social Security benefits to which she might be entitled. The Douglas County employee retirement summary entered into evidence calculated when Susan was 48, sets forth as follows:
If you resign now your monthly benefit at age 65 will be ... $1,055.99
Retire at age [55] with no reduction in benefits ... $1,272.21
If you retire at age 62 your monthly benefit would be ... $1,618.14
If you retire at age 65 your monthly benefit would be ... $1,618.14.
Susan was born on July 10, 1955, and was therefore 49 years old at the time of the dissolution decree.
Leonard filed suggestions with the court, in which he proposed the following as to the division of pension benefits:
[Leonard's] pension is in "pay status". His gross income from the pension is $3,728.75. According [to Susan's] calculation, she should be awarded $1,121.24 per month from [Leonard's] pension award. The problem with [Susan's] suggestion is twofold:
First, [Leonard] is entitled to one-half of [Susan's] pension, as admitted by [Susan] in her Suggestions to the Court. However, she has no intention to retire. While she is getting $1,121.24 from [Leonard's] pension, he will be getting no payment from her pension. According to documents obtained from Douglas County, if [Susan] retired now she would have a monthly benefit of $1,055.00 and [Leonard] would be entitled to one-half of that ($527). The difference between the two amounts is $594. [Leonard] suggests that he pay to [Susan] the sum of $750.00 per month to ... for ten (10) years to equalize their income and the pensions. This amount is higher than the $569 because alimony would be taxable to [Susan]. Under this scenario, [both of them] would both keep their own pensions. The alternative to this would be [to] have [Susan] refund to [Leonard] each month the sum of $527, until such time as she retired and [Leonard] began to draw his portion of her pension. This would not have to be in the form of alimony, and could be termed an equalization payment.
Leonard also suggested that because he did not contribute to Social Security during his employment and would have insufficient time to do so with any future employer, the court should "allow [him] the opportunity to offset some of the inequity in social security benefits against his payment of pension benefits to [Susan]." Leonard explained:
This would be done only when [Susan] begins to receive social security benefits, and the order should state that [Leonard's] social security benefits should be deducted from [Susan's] social security benefit when both begin to collect it, and then offset the remainder, subject to the formula established in the case of Marx v. Marx, 627 A.2d 691 ([] 1993).
Susan's suggestions to the court, in contrast, proposed that each party should be awarded 50 percent of the marital portions of the other's retirement plans. Susan explained that the marital portion of Leonard's plan would be 60.14 percent, calculated by dividing the 249 months of marriage during service by the 414 months of total service. Fifty percent of 60.14 would be 30.07 percent. Thus, Susan calculated that she should be awarded 30.07 percent of Leonard's $3,728.75 monthly distribution, which would be $1,121.24 per month for the remainder of her lifetime. At the hearing, Susan explained that she was opposed to Leonard's suggested distribution of the pension benefits, because she believed that it resulted in an unfair distribution of the assets and would cause her to incur an additional tax liability if the court were to adopt Leonard's suggested distribution in the form of alimony. Susan testified that she was not seeking any alimony.
Leonard assigns that the trial court erred in (1) equally dividing the marital portions of the parties' respective pension plans without considering the fact that Leonard was older and was retired and that his pension was in "pay status"; (2) failing to consider, when dividing the pensions of the parties, the fact that Susan was working at the time of trial and testified that she had no present intention to retire; and (3) failing to consider the fact that Leonard did not contribute to Social Security during his employment with OPPD and that Susan will receive a disproportionate share of his pension benefits unless a Social Security offset is ordered.
The division of property is a matter entrusted to the discretion of the trial judge, which will be reviewed de novo on the record and will be affirmed in the absence of an abuse of discretion. Harris v. Harris, 261 Neb. 75, 621 N.W.2d 491 (2001).
PENSION "PAY STATUS"
We first address Leonard's assertion, embodied in his first two assignments of error, that the trial court erred in failing to adjust the property division for the fact that Leonard's pension plan is already in "pay status," while Susan does not plan to retire for several more years. Essentially, based on the assumption that both parties will live to their actuarial life expectancy and that Susan will not in fact retire until several years into the future, it is Leonard's assumption that Susan will receive many more years of her percentage share of his retirement benefit than he will of hers. Therefore, Leonard concludes that his share of the martial portion of the pension is inequitably low compared to Susan's and that the trial court should have made an adjustment to correct such inequity. Leonard explains:
With respect to the parties' pensions, at the time of trial, [Leonard] was receiving a gross monthly pension payment of $3,728.75. After taxes, he received the sum of $3,010.81. According to documents obtained from Douglas County, if [Susan] retired on December 31, 2003, she would have a monthly benefit of $1,055.99 from her pension, payable at age 65. [Leonard] used this very conservative number in calculating the difference between the amounts that [Leonard] and [Susan] would receive each month if they were both retired. [Susan] acknowledged that if she waited until age 65 to retire, she would receive over $130,000 from [Leonard's] pension before [Leonard] received any funds from the Douglas County pension as an alternate payee. The trial court's decision would have the following effect on income: [Susan's] $2,735.74 per month in salary combined with the $1,121.24 she would receive from [Leonard's] pension would give her a gross monthly income of $3,856.98. In contrast, [Leonard's] gross monthly income would be reduced to $2,607.51.
Brief for appellant at 6-7.
Leonard relies on Dutchin v. Dutchin, 273 Wis.2d 495, 681...
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