Differences in Eligibility for Social Security
National Legal Research Group, Inc.)
One particular situation in which Social Security benefits are most commonly used as a division factor occurs when one spouse participates in the Social Security system, while the other is a state or federal employee who does not so participate. As a matter of common sense, if both spouses have pensions of similar values, but one spouse will receive Social Security and the other will not, the two spouses are not in identical situations. In some way, in some manner, the court must be permitted to consider the disparity in the amounts of money the parties will respectively receive upon retirement.
There are a number of different ways in which this issue can conceptually be approached. Where a state employee receives a specific benefit intended and computed as a Social Security equivalent, it would be entirely reasonable for the legislature to provide that the Social Security equivalent shall be treated in the same way as Social Security itself for purposes of division of property upon divorce. It is important, of course, to exclude only those benefits equivalent to Social Security. For an example of such a statute, see Mo. Rev. Stat. 169.572, dealing with state teachers’ retirement benefits:
1. No court shall divide or set aside any federal old-age, survivors, or disability insurance benefit provided to any party pursuant to the federal Social Security Act, 42 U.S.C. Section 200 et seq., in any proceeding for dissolution of marriage.
2. Subsequent to August 28, 1991, a court of competent jurisdiction may divide the pension, annuity, benefits, rights, and retirement allowance provided pursuant to this chapter between the parties to any action for dissolution of marriage, to the same extent and in the same manner the court may divide any federal old-age, survivors, or disability insurance benefit of the parties provided pursuant to the federal Social Security Act.
See also In re Marriage of Woodson, 92 S.W.3d 780 (Mo. 2003) (rejecting a constitutional attack on the statute).
This sort of remedy probably cannot be implemented by the courts without enactment of a statute, and the failure to enact a statute is not a denial of equal protection. Skelton v. Skelton, 339 Ark. 227, 5 S.W.3d 2 (1999). But if Social Security benefits are beyond the reach of state divorce judges, the wisest policy is probably to give similar treatment to state benefits which are expressly aimed to provide equivalent benefits to state employees.
In the absence of a statute, there are state court decisions which exclude from the marital estate some of the retirement benefits of a spouse who does not participate in Social Security. Case law is divided on the amount of the exclusion. Some of the cases exclude the hypothetical amount of Social Security which the owning spouse would receive if he or she did participate in Social Security. E.g., Cornbleth v. Cornbleth, 397 Pa. Super. 421, 580 A.2d 369 (1990) (the leading case nationwide); Kelly v. Kelly, 198 Ariz. 307, 9 P.3d 1046 (2000); Neel v. Neel, 113 Ohio App. 3d 24, 680 N.E.2d 207 (1996). Other cases exclude the actual value of the nonowning spouse’s Social Security. E.g., Leadingham v. Leadingham, 120 Ohio App. 3d 496, 698 N.E.2d 465 (1997). These remedies are appropriate only where one spouse participates in Social Security and the other does not. Where both either participate or do not participate, there is no unfairness and no need for a special remedy. Elhajj v. Elhajj, 413 Pa. Super. 578, 605 A.2d 1268 (1992).
A greater number of cases, however, reject the notion of excluding benefits from the marital estate merely because one spouse does not participate in Social Security. Mann v. Mann, 778 P.2d 590 (Alaska 1989); Gray v. Gray, ___ Ark. ___,101 S.W.3d 816 (2003); Skelton v. Skelton, 339 Ark. 227, 5 S.W.3d 2 (1999); In re Marriage of James, 950 P.2d 624 (Colo. Ct. App. 1997); Johnson v. Johnson, 726 So. 2d 393 (Fla. Dist. Ct. App. 1999); Hayden v. Hayden, 284 N.J. Super. 418, 665 A.2d 772 (App. Div. 1995); Olson v. Olson, 445 N.W.2d 1 (N.D. 1990); Reymann v. Reymann, 919 S.W.2d 615 (Tenn. Ct. App. 1995); Loudermilk v. Loudermilk, 183 W. Va. 616, 397 S.E.2d 905 (1990). As a matter of classification, there is logic to this approach, because the courts of most states lack authority to create a new exception to the statutory definition of marital property.
As a matter of division, however, there is absolutely no justification for insisting that the divorce court must be blind to a very real and substantial difference in the future retirement benefits of the parties. Where one spouse participates in Social Security and the other does not, this fact is often very important to any real assessment of the future financial needs of the parties. Since almost all equitable distribution statutes permit consideration of future financial needs, the statutes necessarily permit and indeed require consideration of the unavailability of Social Security as a division factor. Such consideration does not interfere in any way with federal policy, for the purpose is not to give reduced benefits to a spouse who receives Social Security, but rather to ensure consistent and fair treatment to a spouse who does not receive Social Security. On the contrary, there is a very reasonable argument that consideration of differing eligibility for Social Security as a division factor is consistent with federal policy in favor of giving fair compensation to federal employees the group of spouses which are most harmed when differences in Social Security eligibility are ignored.
For specific cases permitting consideration of differing eligibilities for Social Security as a division factor, see, e.g., Bain v. Bain, 553 So. 2d 1389 (Fla. Dist. Ct. App. 1990), and Magill v. Magill, 816 S.W.2d 530 (Tex. App. 1991). Where differences in eligibility are fully considered in setting spousal support, the trial court does not err by refusing to consider them in dividing the marital property. Owens v. Owens, 288 A.D.2d 782, 734 N.Y.S.2d 646 (2001).
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