Equitable Distribution

The Present Value Of Vested Defined Benefit Pension Marital Assets Is To Be Used For Equitable Distribution Purposes

In the equitable distribution, family law, divorce case of Lucas v. Daum, PICS Case No. 15-1019 (Pa. Super, June 15, 2015) the Honorable Mary Jane Bowes, writing on behalf of the Pennsylvania Superior Court, ruled that because both husband’s and wife’s pensions had vested, it was error for the master to value the parties’ contributions to their pensions rather than use the present value of the defined benefit portions.  The Order of the trial court reversed.

Jennifer Daum, wife, appealed the equitable distribution order issued following divorce from husband Donald Lucas. At the time of the divorce, husband was employed as a state trooper, with secondary employment involving teaching computer forensics; wife was a public secondary school teacher. The master recommended wife receive $435, monthly alimony and that the parties bear their own legal costs, split the proceeds of the sale of the marital residence 55/45 in favor of wife.

Both parties filed exceptions, which were overruled by the trial court who accepted the recommendations of the master. Wife appealed.

The court ruled that the master erred in valuing the parties’ pensions based on their contributions rather than the present value of the defined benefit portions, which far exceeded the parties’ contributions. The court further ruled that the master erred in using immediate offset to compensate for the parties’ pensions as the court found that the value of wife’s portion of the marital estate would not be able to offset the present value of the defined benefit portion of husband’s pension.

The court ruled that the trial court did not abuse its discretion in adopting the master’s recommendations of the alimony award. However, since the trial court’s decision was also based on the relative assets and liabilities of the parties, because revaluation of the parties’ pensions could have also resulted in reallocation of assets and liabilities, the court ordered the trial court to reevaluate the sufficiency of the alimony award.

Similarly, the court held that the revaluation of the parties’ pensions could have also had an impact on the master’s recommended split of the proceeds of the sale of the marital residence, despite wife’s significant contribution of funds from an inheritance towards the down payment on the purchase that the court found was apparently taken into consideration, alone with other factors, in the master’s recommended split. As a result, the court ordered the trial court to reevaluate the division of the proceeds from the sale of the marital residence.

The court further held that its reversal with respect to the parties’ pensions also impacted the division of the marital debt, as the court noted that the master assigned wife three times as much debt as husband despite his greater income due to assigning wife her student loan debts that accounted for the bulk of the total debt, and further offset with the proceeds of the sale of the marital residence. Accordingly the court also ordered the trial court to reevaluate the division of debt.

The court also directed the trial court to reevaluate the division of personal property, in light of both the revaluation of the parties’ pensions, as well as the lack of support for the master’s recommendation that simply accepted husband’s valuation that husband conceded was “probably high.”

Finally, the court ruled that the ordering of both parties to pay their own legal expense was in error, where the master failed to make factual findings regarding wife’s actual need ability to pay, or the reasonableness of the fees incurred. Also considering the revaluation of the parties’ pension, the court ordered the trial court to reexamine the division of legal costs.

Reference: Digest of Recent Opinions, Pennsylvania Law Weekly; 38PLW630 (July 7, 2015)

Filed Under: Equitable Distribution: Valuation of Pension Assets; Family Law

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