Total Years of Service
National Legal Research Group, Inc.)
Attention: the information on this page pertains to the following case analysis: Kelly Vs Kelly. It is recommended to read this case analysis for a full understanding.
The main contested issue in Kelly was the husbandís total years of service. The husband argued and the trial court found that the husband had 25 years of service, because 25 years of service were used to compute his basic pay. The wife argued that the husband had only 20 years of service, because that was the number the military used to compute his actual retirement benefits.
The Wyoming Supreme Court agreed with the wife. The court holding demonstrates an important point: the marital share fraction is based upon creditable service with an employer. The husband had served in the National Guard from 1969 to 1983, and in the army from 1983 to 2002. Since neither of these periods is exactly 20 or 25 years, it is apparent that the husbandís creditable service must have been different from his actual service. This is not uncommon, in either military or civilian employment. Employees must sometimes work for the employer for a few years before becoming eligible to join the retirement plan; employees who work part-time sometimes get less than a day of creditable service for a day of part-time work. In all cases, in defining time for purposes of the marital share fraction, the court must look to creditable service as defined by the employer, and not to total time. See Richards v. Richards, 207 A.D.2d 628, 615 N.Y.S.2d 784 (1994) (where husband was laid off from employment at start of marriage, so that all growth in his pension during that period was passive appreciation in separate property, period of layoff was not creditable service); Cherry v. Cherry, 55 Ark. App. 178, 934 S.W.2d 936 (1996) (four-year period of temporary medical retirement from military was not creditable service); Schmalle v. Schmalle, 586 N.W.2d 677 (N.D. 1998) (error to include break in service to employer, which apparently did not count as creditable time under terms of employerís pension plan).
This is likely to be a particularly important issue with regard to military benefits in future years. The military is downsizing, relying less on traditional full-time, full-service personnel. At the same time, crises in places such as Afghanistan and Iraq have resulted in increased duty for National Guard and Reserve personnel. Because of the smaller, more flexible military personnel structure, the courts are likely to see an increasing number of cases in which creditable service and actual service are different. A more sophisticated approach to measuring the coverture fraction will therefore be required.
Another good demonstration of this point is Faulkner v. Goldfuss, 46 P.3d 993 (Alaska 2002). The wife in that case earned military retirement benefits while on reserve status. Service members on reserve status accrue pension time under a point system, with larger numbers of points being awarded for assignment to more extensive duties. See generally 10 U.S.C.A. 12732(a)(2). The trial court used raw time to measure the marital share. Quite properly, the Alaska Supreme Court reversed:
We agree with Kimís contention that the superior court should have determined the marital share of Kimís pension based on the number of points earned during the period of coverture rather than the number of months of employment during coverture. The marital share of a pension is typically determined by the coverture fraction, whose numerator is the number of months of employment during coverture, and whose denominator is the total number of months of employment at the time of vesting. But where the value of retirement benefits is not directly related to the length of employment such as when retirement benefits will be determined by the number of points earned as a result of the nature and frequency of the service rendered the coverture fraction should be modified so that the numerator becomes the number of points earned during the period of coverture, and the denominator becomes the total number of points earned. Because Kimís retirement is determined in part by the number of points she will have earned Kim earns one retirement point for each day of active duty it was error to determine the marital share of Kimís retirement simply based on the number of months of employment during coverture rather than the number of points earned during coverture. We therefore remand for additional findings.
46 P.3d at 1003 (footnotes omitted). In short, many pension plans do not treat every day of employment as a day of creditable time for purposes of retirement benefits. It is therefore essential that courts and counsel dividing retirement plans base their computations upon creditable time under the terms of the specific plan involved. Since creditable time is almost always listed on the employeeís benefit statement, use of creditable time will not add materially to the difficulty of computing the marital share fraction in most divorce cases.
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