Dissolution of Marriage • Equitable Distribution • Pension Value • Coverture Fraction • Payment Status
Martinez v. Martinez, PICS Case No. 14-0428 (C.P. Berks Jan. 22, 2014) Bucci, J. (32 pages).
Pursuant to the Divorce Code, the Court of Common Pleas utilized the coverture fraction to determine the marital portion of the parties’ pensions and then decided to reduce the value of wife’s monthly pension to reflect the fact that she was not yet receiving payments. Equitable distribution order issued.
The parties were married in 1988. On Sept. 17, 2006, wife left the marital residence. She filed for bankruptcy after the date of separation. Wife also filed a complaint in divorce after leaving the marital residence in which she asserted claims for equitable distribution.
The parties appeared for a hearing before a divorce master on May 11, 2011. At the time, the parties had been separated for more than four years. Husband’s earnings were approximately $61,000 per year. He was also receiving $4,478 per month in distributions from his pension. Wife’s earnings at that time were about $70,000 per year. She had a federal pension valued at $74,853.
The master recommended that husband pay wife $1,017 per month, or 50 percent of the monthly value of husband’s pension. Wife was to retain her pension and husband was to make a one-time payment of $5,000 to wife. Thus, wife would receive or retain $81,518 in property at the time of the distribution of $1,017 per month until she began to receive Social Security benefits.
Both parties filed exceptions. Thereafter, the Court of Common Pleas remanded the matter for additional fact-finding proceedings. The primary issue was how to equitably divide the parties’ pensions where husband’s pension distributions included post-separation enhancements and was in pay status, while wife’s pension would not be in pay status for a significant period of time.
The master avoided this dilemma by using the parties’ pension values as of the date of separation. Upon remand, the master submitted a report and recommendation using updated valuations provided by the parties and the coverture fraction methodology in calculating the marital portion of the parties’ pensions.
Ultimately, the master found that the application of the average of the parties’ experts’ proposed coverture fractions to husband’s current monthly benefit resulted in the amount of $2,917, which the master then reduced by 13 percent to reflect a Social Security offset, for a final marital value of $2,535.
The master also found that the application of the average of the two experts’ proposed coverture fractions to the present value of wife’s federal pension resulted in the amount of $1,017 per month. He recommended that husband pay wife $1,289, or 50 percent of the marital portion of husband’s pension, per month until wife reached the age of 59 and a half years. Thereafter, payments were to be reduced to $759 per month to reflect the parties’ offsetting pensions once wife was entitled to her federal pension.
The matter came before the Court of Common Pleas again on the parties’ exceptions. The parties disagreed on how to value husband’s pension (the largest asset at issue), on whether application of the coverture fracture to determine the marital portion was appropriate and how to equitably offset wife’s pension.
The court first determined that the regular contributions husband made to his pension plan during his three and three tenths years of post-separation service constituted post-separation monetary contributions. As such, the master was correct to apply the coverture fraction to the full amount of husband’s current monthly pension benefit.
The court also found that husband’s pension attributable to his purchase of four and three quarts years of service was excluded from the marital estate because it arose from a post-separation monetary contribution, over and above any regular deduction. Thus, the master was correct in utilizing the coverture fraction to determine the marital share of husband’s pension.
Finally, the court considered how to equitably offset wife’s pension against husband’s. The court found it necessary to offset the marital portion of the parties’ pensions but to reduce the value of wife’s monthly pension to reflect the fact that she was no yet receiving payments. The Superior Court’s decision in DeMarco v. DeMarco, 787 A.2d 1072 (Pa. Super. 2000) provided guidance.
In the interest of fairness, the court decided to attribute only 40 percent of the marital portion of the current value of wife’s federal pension to wife for purposes of calculation the amount to offset against the marital portion of husband’s pension. Since 100 percent of the martial portion of wife’s pension would more than offset the marital portion of husband’s pension when wife retired, the court decided that upon wife’s reaching the age of 59 and a half years, husband’s obligation to pay wife a portion of his pension would terminate.