The property of married persons is divided into separate and community property[i]. Property takes its status as community or separate at the time and by the manner of its acquisition[ii]. Community property is that which is acquired by the husband and wife during marriage[iii].
A pension is a part of community property[iv]. Also, matured private retirement, annuity, and pension benefits earned by either spouse during the marital relationship are part of the community property and subject to division upon dissolution of the marriage[v].
Since retirement benefits belong to the community, a wife has a right to share in those benefits[vi]. The property right to share in the retirement or pension fund proceeds acquired by the wage earner is acquired during the marriage and is a community property[vii].
A spouse has a community property interest in that portion of retirement benefits that the other spouse earned during their marriage[viii]. This is true even though the benefits at the time of divorce have not matured and are not subject to possession at the time of divorce[ix].
Each contribution of the employer to the retirement or pension funds entitles the employee or his beneficiary to share subsequently in the funds’ proceeds, when made during the community[x].
However, the right-to-share proceeds of a retirement and/or profit sharing plan acquired during the community, arising from each contribution made during the marriage, does not contractually vest until the employee’s death, retirement, or withdrawal from employment[xi].
Community property laws do not act as an assignment but rather prescribe property rights in pension benefits as between spouses[xii]. Community property laws seek to take account of the contributions of the non-working spouse to the prosperity of the marriage partnership and invest that spouse with an equal right to succeed to the property of the community upon its dissolution[xiii].
The primary purpose of disability benefits is to compensate the disabled spouse for lost earnings–earnings which would normally be separate property[xiv]. The benefits, if acquired with community funds, become community property only insofar as they are intended to provide retirement income[xv].
However, post separation disability benefits, even if intended to provide retirement income, may be treated as community property only to the extent they were purchased during marriage with community funds[xvi].
Profit sharing and retirement plans are classified as community property even though none of the funds are available or subject to possession at the time of divorce[xvii].
When a community is dissolved, the employee’s spouse is entitled to be recognized as the owner of one-half the value of the right-to-share, to the extent the contributions paid into the fund during the existence of the community[xviii].
However, until the community is terminated, either spouse may dispose of community property unless otherwise provided by law[xix]. Similarly, only if and when the employee spouse decides to retire will the retirement benefits become payable[xx].
In an action to secure a division of community property after a divorce, in Crossan v. Crossan, 35 Cal. App. 2d 39 (Cal. App. 3d Dist. 1939), the court held that the husband’s interest in the State Employees’ Retirement Fund, as an employee of the state, is community property. The court observed that even though a husband has no property or contract right in the fund and such a right could not accrue until the happening of an event, such as retirement or discontinuance of employment, where upon the happening of such event the amount payable would represent earnings, and the money paid into said fund by the husband is community property, and his interest is a right purchased with community funds.
In Boggs v. Boggs, 520 U.S. 833 (U.S. 1997), the court held that under the Employee Retirement Income Security Act of 1974, the surviving spouse annuity and the qualified domestic relations order, provisions which acknowledge and protect specific pension plan community property interests, give rise to the strong implication that other community property claims are not consistent with the statutory scheme.
The community share of a pension may include increased benefits attributable to salary increases following dissolution but not increases due to additional years of service[xxi]. Also, post-divorce increases in an individual’s retirement benefits not attributable to raises, promotions, services rendered, or contribution are subject to community property division[xxii].
[i] United Asso. of Journeymen & Apprentices of Plumbing & Pipefitting Industry . . . Pension Plan v. Myers, 488 F. Supp. 704 (M.D. La. 1980)
[ii] Franklin v. Franklin, 116 N.M. 11 (N.M. Ct. App. 1993)
[iii] United Asso. of Journeymen & Apprentices of Plumbing & Pipefitting Industry . . . Pension Plan v. Myers, 488 F. Supp. 704 (M.D. La. 1980)
[iv] Franklin v. Franklin, 116 N.M. 11 (N.M. Ct. App. 1993)
[v] Cearley v. Cearley, 544 S.W.2d 661 (Tex. 1976)
[vi] Wittorf v. Shell Oil Co., 37 F.3d 1151 (5th Cir. La. 1994)
[vii] United Asso. of Journeymen & Apprentices of Plumbing & Pipefitting Industry . . . Pension Plan v. Myers, 488 F. Supp. 704 (M.D. La. 1980)
[viii] Burchfield v. Finch, 968 S.W.2d 422 (Tex. App. Texarkana 1998)
[x] United Asso. of Journeymen & Apprentices of Plumbing & Pipefitting Industry . . . Pension Plan v. Myers, 488 F. Supp. 704 (M.D. La. 1980)
[xi] T. L. James & Co. v. Montgomery, 332 So. 2d 834 (La. 1976)
[xii] Carpenters Pension Trust v. Kronschnabel, 460 F. Supp. 978 (C.D. Cal. 1978)
[xiv] In re Marriage of Elfmont, 9 Cal. 4th 1026 (Cal. 1995)
[xvii] Cearley v. Cearley, 544 S.W.2d 661 (Tex. 1976)
[xviii] Eskine v. Eskine, 518 So. 2d 505 (La. 1988)
[xix] Wittorf v. Shell Oil Co., 37 F.3d 1151 (5th Cir. La. 1994)
[xxi] In re Marriage of Greene, 97 Wn. App. 708 (Wash. Ct. App. 1999)
[xxii] Burchfield v. Finch, 968 S.W.2d 422 (Tex. App. Texarkana 1998)