This blog post is written with input from Eliana T. Baer, who, along with Robert A. Epstein, was instrumental to the outcome of the below case. I thank them both for their extensive time and efforts, without which this result would not have been possible.

An important reported decision was decided by the Appellate Division concerning the distribution of post marital contribution of pensions and retirement plans. A copy of the case can be found here. While the case itself concerned a former service member’s military retirement pay, the matter has wide implications for all retirement plans which are not distributed at the time of divorce. This was a case which I had alluded to in a previous blog which can be found here, and in which we represented Thomas Barr, who had earned credits toward a military retirement during his marriage. In the case of Barr v. Barr, the parties were divorced after the husband, Thomas, had served eleven years of active duty in the Air Force. Thomas was not represented by counsel at the time of the divorce and his wife’s attorney prepared a property settlement agreement which provided that "The Wife will receive 50% of Husband’s pension benefits attributable to his 11 years in the military service only. Such benefits are to be distributed when Husband commences receiving same." After the parties divorce, Thomas went on to enroll in the reserves and during that time, accumulated enough time to entitle him to military retirement pay.

When Thomas began receiving his retired pay, he calculated what he believed he owed his former wife, Judith, and made a deduction for taxes that he had to pay. This went on for a period of time, and the parties had a disagreement and Thomas ceased paying. When Judith made an application for enforcement, Thomas realized that the amount that he had been paying was what he believed to be the incorrect amount, and in his response to her motion, asked that the amount be adjusted. Specifically, he argued, in part, that because the formula used to calculate retired pay benefits considers a military member’s rank pay at retirement as well years of service, it was possible to calculate the amount that was attributable to his rank at the time of the parties’ divorce, which would give meaning to the agreement of the parties that Judith would only be entitled to the portion attributable to his active duty. A service member receives points for each day of military service: one point for each day of active military service and two points for each day of reservist duty. Additional points accrue based on the completion of certain training, drills and funeral honors duty. The actual member’s benefit is the product of the base pay for the rank achieved at retirement and two-and one-half percent of the points representing the years of service credited.


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When lawyers say you should never represent yourself, even in so called, “simple” cases,  they are often accused of being greedy, driving up fees, and unwilling to acknowledge that there are smart people out there that are capable of working out the terms of a settlement.  I have recently been involved in a case which has been really bothering me. It is the perfect example of an intelligent, thoughtful, detailed oriented individual who believed he knew what he was agreeing to twenty three years ago when he was divorced and now finds himself in a position where a trial court has interpreted his divorce settlement agreement far differently than he did back then.

 In my case, my client did not have an attorney at the time that he was divorced .  He and his wife were able to reach an amicable agreement as to the terms of their divorce and she hired a layer to draft the agreement and put the divorce through.  When they got the issue of my client’s retirement benefits, he agreed to language which he thought would limit his ex-wife’s share of his retirement. Unfortunately, he did not have his own counsel to inform him of what is often referred to the “marital foundation” theory, which essentially means that as a result of the foundation that is built in the early part of employment ( which usually occurs during the marriage), a former spouse will be entitled to the benefit of  some post marital efforts.

 

Usually, a former spouse’s entitlement to a retiree’s pension is calculated by use of what is known as a “coverture” fraction. In its simplest form, the coverture fraction is one in which the numerator is the number of years or months that the employee worked during the marriage and the denominator is the total number of months or years worked. That fraction is then multiplied by the percentage of which the former spouse is entitled ( usually 50%). The resulting number is the actual percentage of the pension payment that the former spouse will receive.  This fraction is used for several reasons. First, as I have previously stated, the theory is that during the marriage, a foundation is built which allows the working spouse to advance in later years. Second is the reality that this is a mathematical way to segregate out the marital portion. It is not, however, a perfect science given the way that the majority of pensions are calculated.  The end result is often that the former spouse shares to some extent in a pension benefit that is calculated based upon a higher salary which was earned after the divorce.

 


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