In a divorce or dissolution of marriage, California courts, like a handful of other states, divide all real and personal property based upon “community property” laws. California courts will first classify property as community property or separate property. Generally, courts will presume property acquired during a marriage to be community property and property acquired outside of or prior to the marriage to be separate property. Each party keeps their separate party while equally dividing the community property.
At first blush, community property laws seem very methodical and straight forward; however, considering the array of property a couple may accrue over their life and within the marriage, the rules can quickly become complicated and confusing. You do not have to become overwhelmed with the complex rules if you have an experienced and knowledgeable San Jose Divorce Lawyer on your side.
In re Marriage of Green
Last summer, the California Supreme Court (“SCT”) decided whether a divorcing spouse has to share a pension increase from upon a service credit earned prior to the marriage. In the case, In re Marriage of Green, the husband had served in the Air Force prior to the marriage. After his military service, he joined a fire department that participated in the California Public Employees’ Retirement System (“CalPERS”). Cal. Gov. Code § 21024 allows members of CalPERS to take credit for previous public service, including military service, for up to four years. Members can make contributions to gain the service credit which will increase their pension. The Air Force veteran married and, during the marriage, started making contributions to claim this service credit. Upon divorce, the parties disputed over whether to classify the military service credit as separate or community property.
What was at stake was the difference between the amount of money paid to receive the credit, $11,462.56, and the pension increase due to the credit, $140,000; basically what the employee pays and what the employer matches. The trial court awarded the wife $6,699.54, which is half of the community property paid into the pension plus interest; however, the court classified the service credit as separate property and awarded the pension increase to the husband. A California appellate court reversed the decision and classified the service credit as community property.
In re Marriage of Lehman
The ex-wife argued that a service credit is an enhancement following, In re Marriage of Lehman. In Lehman, one spouse paid into a pension plan while married. The couple divorced making the pension community property. The husband took an early retirement, which the employer added three years to the pension plan to entice early retirement. The SCT, in Lehman, recognized that the non employee spouse has a right to the share in the pension as it is “ultimately determined,” and classified the increase, from the three years, as an enhancement.
The current court distinguished Lehman from Green, in that the years of employment in Lehmen were fictitious years created by the employer and not from the service of the employee. It would have been the same as if the employer had added a cash incentive for early retirement.
In re Marriage of Sonne
The Green court also compared the facts to In re Marriage of Sonne. In Sonne, the husband paid into a pension during his first marriage. At divorce, the first wife took an immediately payout of her community property portion of the pension. The husband remarried, and exercised his right to redeposit those contributions back into the pension. The Sonne court ruled that the husband earned the service credit prior to the second marriage, and thus, declared it separate property.
In the current case, Green, the court stated that the marital status of the employee spouse when the service credit accrued determines whether the benefit is community property or separate property. The SCT held that the service credit was earned prior to the marriage and was separate property. The wife was entitled to the amount of community property paid into the plan but not the benefit related to the service credit.
Community property laws require that divorcing couples divide the marital assets and debts between them. Asset and debt division can be complex and emotionally challenging. Our legal team has handled many cases involving difficult property division, and we can provide you with the information and representation that you deserve during your divorce.
San Jose Divorce Lawyer, John S. Yohanan, has extensive experience handling both divorce settlements and divorce trials. If you want a divorce lawyer with more than 30 years of experience on your side, call our office at (408) 297-0700.
A Guide to CalPERS: Community Property , Nov. 1, 2013, California Public Employees’ Retirement System
Divorce or Separation: Property and Debt, 2014, California Courts: The Judicial Branch