Equitable Distribution

WIFE’S SURVIVOR BENEFIT SHOULD HAVE BEEN INCLUDED IN THE EQUITABLE DISTRIBUTION OF MARITAL PROPERTY

Wife’s survivor benefit should have been included in the equitable distribution of property. The court ordered wife to roll over a portion of her retirement account to accomplish an immediate offset.

The parties were married in 1986. They separated in 2018, and husband filed for divorce. Following a hearing, the divorce master filed a report and recommendation. Husband timely filed exceptions to the master’s report.

Several of the husband’s exceptions involved the valuation of husband’s pension and the master’s decision to exclude wife’s survivor benefit. Husband argued that the master should have included the value of wife’s survivor benefit in the equitable distribution of property. Survivor benefits are vested property interests, and the case law held that survivor interests should generally be valued as marital assets. Palladino v. Palladino, 713 A.2d 676. The court concluded that the master erred in failing to account for the present value of wife’s survivor benefit. Actuarial analysis testified at the hearing, and the present values of wife’s survivor annuity and husband’s pension were submitted into evidence.

In allocating the parties’ retirement benefits, prior cases indicated that the immediate offset method was preferred over the deferred distribution method where the estate had sufficient assets to offset the pension. Husband argued the master erred in assigning him the value of his pension as an immediate offset of the marital property. Husband’s pension was already vested and in pay-out status. The court found this was appropriate, because the parties had sufficient assets to award wife to offset husband receiving his entire pension. Because the master erred in failing to include wife’s survivor benefit, the court amended the distribution to award husband cash offset so he could have some liquid assets. To accomplish this, the court required wife to roll over a specified amount from her 401(k) account into a qualified account for husband.

Husband also claimed the master erred in finding that wife would not have the opportunity to acquire assets in the future. He argued that wife was working and consistently made voluntary contributions to her 401 (k) plan, which allowed her to increase her assets. The court concluded that the master did not err with respect to this finding, because wife’s opportunity to augment her assets was not particularly significant. Furthermore, the court found it unlikely that the overall distribution scheme would have been amended, because husband was already receiving a large portion of the marital estate.

Husband took issue with the master’s refusal to award husband a payment from wife’s retirement plan to assist him in paying the marital debts. A large portion of the debt assigned to husband was associated with the house in which he continued to reside and for a vehicle he purchased shortly before he filed for divorce. Given that the court was already amending the master’s proposed plan based on wife’s survivor annuity, the court denied this exception.

Reference:

Digest of Recent Opinions, Pennsylvania Law Weekly, 42 PLW 702, Tuesday, July 23^rd, 2019, Woodson v. Woodson, PICS Case No. 19-0783 (C.P. Adams May 28^th, 2019)

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