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Classification of Social Security as Marital Property
(Provided by National Legal Research Group, Inc.)

Under 42 U.S.C. 407(a), Social Security benefits are not subject to any form of attachment by creditors. Moreover, under 42 U.S.C. 1304, Congress reserves the right to amend the Social Security system at any point, even if vested rights are affected. In Fleming v. Nestor, 363 U.S. 603 (1960), relying upon these provisions, the United States Supreme Court held that the right to receive Social Security benefits generally does not constitute property. "To engraft upon the Social Security system a concept of ’accrued property rights’ would deprive it of the flexibility and boldness in adjustment to everchanging conditions which it demands." Id. at 610.

The Court has never directly considered whether federal law prevents state courts from treating Social Security benefits as marital property. It has held, however, that other federal benefits with similar antiassignment provisions cannot be so treated. See Mansell v. Mansell, 490 U.S. 581 (1989) (military disability benefits); McCarty v. McCarty, 453 U.S. 210 (1981) (military retirement benefits, before enactment of specific federal statute permitting division); Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979) (railroad retirement benefits, before enactment of statute permitting limited division).

The overwhelming consensus holding of the state courts, under Fleming and by analogy to Mansell, McCarty, and Hisquierdo, is that federal law preempts state community property and equitable distribution law and prevents direct division of Social Security benefits upon divorce. See Mann v. Mann, 778 P.2d 590 (Alaska 1989); Wisner v. Wisner, 129 Ariz. 333, 631 P.2d 115 (Ct. App. 1981); In re Hillerman, 109 Cal. App. 3d 334, 167 Cal. Rptr. 240 (1980); Sherry v. Sherry, 108 Idaho 645, 701 P.2d 265 (Ct. App. 1985); In re Marriage of Crook, 334 Ill. App. 3d 377, 778 N.E.2d 309 (2002); In re Hawkins, 160 Ill. App. 3d 71, 513 N.E.2d 143 (1987); In re Evans, 85 Ill. App. 3d 260, 406 N.E.2d 916 (1980); In re Boyer, 538 N.W.2d 293 (Iowa 1995); In re Knipp, 15 Kan. App. 2d 494, 809 P.2d 562 (1991); Gross v. Gross, 8 S.W.3d 56 (Ky. Ct. App. 1999); Thibodeaux v. Thibodeaux, 712 So. 2d 1024 (La. Ct. App. 1998) (Social Security disability); Pleasant v. Pleasant, 97 Md. App. 711, 632 A.2d 202 (1993); Rudden v. Rudden, 765 S.W.2d 719 (Mo. Ct. App. 1989); Koziol v. Koziol, 10 Neb. App. 675, 636 N.W.2d 890 (2001); Wolff v. Wolff, 112 Nev. 1355, 929 P.2d 916 (1996); English v. English, 118 N.M. 170, 879 P.2d 802 (Ct. App. 1994); Thomas v. Thomas, 221 A.D.2d 621, 634 N.Y.S.2d 496 (1995); Cruise v. Cruise, 92 N.C. App. 586, 374 S.E.2d 882 (1989); Kluck v. Kluck, 561 N.W.2d 263 (N.D. 1997); Olson v. Olson, 445 N.W.2d 1 (N.D. 1989); Neville v. Neville, 99 Ohio St. 3d 275, 791 N.E.2d 434 (2003); Crocker v. Crocker, 824 P.2d 1117 (Okla. 1991); Umber v. Umber, 591 P.2d 299 (Okla. 1979); In re Marriage of Short, 155 Or. App. 5, 964 P.2d 1033 (1998); In re Swan, 301 Or. 167, 720 P.2d 747 (1986); Powell v. Powell, 395 Pa. Super. 345, 577 A.2d 576 (1990); Kirk v. Kirk, 577 A.2d 976 (R.I. 1990); Richard v. Richard, 659 S.W.2d 746 (Tex. App. 1983); In re Marriage of Zahm, 91 Wash. App. 78, 955 P.2d 412 (1998); Loudermilk v. Loudermilk, 183 W. Va. 616, 397 S.E.2d 905 (1990). See generally Laura W. Morgan, The Effect of Social Security Benefits on Divorce Cases, 5 Divorce Litigation 209 (1993).

Two decisions hold that federal law does not even allow state courts to enforce a purely contractual division of Social Security benefits. See Gentry v. Gentry, 327 Ark. 266, 938 S.W.2d 231 (1997); Boulter v. Boulter, 113 Nev. 74, 930 P.2d 112 (1997).

A few decisions hold that Social Security benefits are separate property under state law, without considering federal preemption. These cases reach the right result, but fail to acknowledge a crucial issue. See Mason v. Mason, 319 Ark. 722, 895 S.W.2d 513 (1995); Cooper v. Cooper, 143 N.C. App. 322, 545 S.E.2d 775 (2001).

Scattered decisions hold that Social Security benefits are marital property under state law, without expressly addressing federal preemption. See In re Marriage of Gilmore, 943 S.W.2d 866 (Mo. Ct. App. 1997); Traxler v. Traxler, 730 So. 2d 1098 (Miss. 1998); Murphy v. Murphy, 797 So. 2d 325 (Miss. Ct. App. 2001); Wiercinski v. Wiercinski, 116 A.D.2d 789, 497 N.Y.S.2d 179 (1986). All of these holdings are highly questionable. Gilmore is particularly questionable in light of Rudden v. Rudden, 765 S.W.2d 719 (Mo. Ct. App. 1989), which recognized preemption.

Significantly, no state court appellate decision which has addressed the federal preemption issue has ever concluded that federal law permits the direct division of Social Security benefits in divorce cases.

Past Benefits. At least one state court decision holds that past benefits deposited into a bank account or other clearly identifiable source continue to be exempt from division. Kluck v. Kluck, 561 N.W.2d 263 (N.D. 1997). Conversely, where the benefits were commingled with other property and could not be traced, another court found that the past benefits were not exempt. See In re Marriage of Box, 968 S.W.2d 161 (Mo. Ct. App. 1998). For cases applying these two rules to other types of benefits preempted by federal law, see Brett R. Turner, Equitable Distribution of Property 6.05 nn.110-111 (2d ed. 1994 & Supp. 2002).

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