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Click here for the full text of this decision FACTS:Paul Stavinoha began working for the Houston police in January 1975, and enrolled on the police officer’s pension system in May 1975. He married Maureen in June 1979. Paul was eligible to retire in May 1995, but instead of retiring, he decided to participate in the pension system’s Deferred Retirement Options Plan (DROP), which was open to members with 20 or more years of service. Under DROP, the officer continues working and drawing a salary, while the retirement annuity he could have earned accumulates in a separate DROP account; the proceeds of this account are then paid to the officer as a lump sum when he finally does retire. The officer would also be entitled to monthly pension benefits at this time. Paul and Maureen petitioned for divorce in 2000. Though they resolved most issues in mediation, several property issues, including entitlement to Paul’s pension, were decided in a nine-day bench trial. The June 21, 2002, divorce decree provided that (1) the monthly benefit credited to the DROP account from 1995 until the date of divorce (June 21, 2002), was apportioned between the community and separate estates; (2) the monthly benefit credited into the DROP account after June 21, 2002, but prior to Paul’s actual separation from service, was characterized as 100 percent Paul’s separate property; and (3) the monthly benefit paid after Paul’s actual separation from service was apportioned between the community and separate estates. Maureen was awarded 50 percent of the apportioned retirement benefits. At Maureen’s urging, the trial court filed findings of fact and conclusions of law, then Maureen appealed. HOLDING:Reversed and remanded. In this matter of first impression for Texas courts, the court rules that when a member of the Houston police pension program divorces after electing to enter its DROP program, the retirement benefits that are deferred because of DROP participation are community property, to the extent they were earned during the marriage, and subject to a just and right division at divorce. The court confirms that for Paul to overcome the presumption that property such as the pension is part of the community of assets, he must establish the property’s separate character by clear and convincing evidence. The court further confirms that to overturn the trial court’s ruling on property division, Maureen must show that the trial court clearly abused its discretion or that the order is manifestly unjust and unfair. The court also discusses its own standard of review on appeal. The court finds that all of the disputed benefits were earned during Paul’s and Maureen’s marriage. Looking at the terms of the original pension plan and the DROP provisions, the court cites with approval the facts Maureen emphasizes: (1) Paul was fully vested in the plan in 1995 after he completed 20 years of service; (2) Paul’s monthly pension benefit was fixed and frozen in 1995, and additional service, raises, or promotions could not change the basic benefit; (3) since 1995, Paul has been a “retiree” and his monthly pension benefit has been, and will continue to be, credited into a DROP account until he actually separates from service; and (4) Paul does not need to continue working to receive benefits. Maureen is thus entitled to a percentage of the community interest in all of the disputed benefits credited to Paul’s DROP account, including those credited post-divorce, though Paul may keep as separate property the contributions he makes post-divorce from his own salary. The court also holds that the cost of living adjustments in the plan were also community property, as were specific payments spelled out in the DROP plan provisions. The court rejects Paul’s reliance on the inception of title doctrine, which traces title to the time when a party first has a right of claim to the property by virtue of which title is finally vested. He says that the disputed benefits are the result of toil exerted during a time when he and Maureen were no longer married. The court again points out that the mere fact that DROP credits are made post-divorce does not mean that they are benefits that are earnedpost-divorce. When Paul chose to participate in the DROP, the amounts credited to his account represented vested retirement benefits, not Paul’s earnings. The court then applies the Taggart Apportionment Formula, from Taggart v. Taggart, 522 S.W.2d 422 (Tex. 1977), which considers what percentage of the total amount of an asset was earned during the marriage. Under this formula, the court determines that the community estate had a 80.11 percent interest in many of the benefits discussed here. The court remands for further calculation of the amount Maureen is entitled to. OPINION:Fowler, J.; Fowler and Edelman, JJ. Brister, C.J., not participating.

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